Kevin Barron: My right hon. Friend will be aware that, earlier this year, his Department agreed a multi-million pound investment in the village of Maltby in my constituency, which included the rebuilding of three schools, one of which is the secondary school that is going to become an academy. Is he aware that the Conservative Opposition on Rotherham borough council have voted against this, and that, on 15 April, at a meeting of the scrutiny committee that attempted to prevent the project from going ahead, the prospective parliamentary candidate for the Tory party, Councillor Lynda Donaldson, voted against the rebuilding of those schools?

Eric Illsley: What assessment he has made of the effects on sixth form provision in Barnsley of the financial difficulties in the Building Colleges for the Future programme.

Edward Balls: My hon. Friend will understand why it is hard for me to press the LSC at this stage while it is doing its consultation, but as I said, in the next two years, £80 million of 16-to-19 funding is being brought forward now to help to deal with the issue. I understand the particularly acute needs of Barnsley college, given the advanced state of the plans and the investment there. The consultation will be done properly. We will also ensure that no college loses out. Like him, I would like the building of that final stage of the Barnsley project to be completed as soon as is practically possible.

Martin Salter: How many three and four year olds in Reading have free nursery places.

Beverley Hughes: Frankly, that was nonsense. It is because this Government doubled the number of places for the under-fives that the private sector was able to expand in the way it did under the Government last year; there are now more than 1.3 million places. The funding that we are putting in for free entitlement is enabling those providers to stay in business largely. Certainly our independent research shows that the money that we are putting in—£4 billion a year across all early years provision—is sufficient for free entitlement. We want local authorities to be more consistent in the way in which they administer that, but it is helping the private sector to thrive.

Edward Balls: I can, and I would happily have answered the question directly if the hon. Member for Surrey Heath (Michael Gove) had raised it with me. I have nothing to add to the evidence that I gave the Sutherland inquiry, which showed—as I said to Lord Sutherland—that following the exchange we had in oral questions on 19 May I immediately, between my office and Ken Boston's office, raised the question with him and asked for reassurances, which I received. Secondly, I had a meeting with him on 2 June where I was reassured. Thirdly, on 6 June I asked Ken Boston to respond to a constituent of mine who had raised concerns, and Ken Boston wrote on 16 June to reassure my constituent that things were on track. As Lord Sutherland shows, Ministers regularly pressed Ken Boston and the QCA. It was only at the end of June that the actual problems arose. As Lord Sutherland says, his inquiry was fair. It had broad terms of reference and it concluded that ETS and the QCA were at fault. I entirely support Lord Sutherland's inquiry and his conclusions, and we will implement them, as is the proper thing to do.

Edward Balls: I looked into this a few months ago. The legislation is in place; the issue is whether local authorities are properly implementing the legislation and the guidance. We contacted local authorities, and will continue to do so, to press them to take seriously their obligations to make sure that the registration schemes in place work properly. Our view is that it is not right to toughen up the law. The important thing to do is to make sure that the law that currently applies is implemented. That is the approach that we are taking to the very important issue that the hon. Lady raises.

Jack Straw: With permission, Mr. Speaker, I shall make a statement on prisons and probation.
	Let me begin by paying tribute to the 70,000 staff working in the services. Last Monday, the Minister responsible for prisons, my right hon. Friend the Member for Delyn (Mr. Hanson), issued a written ministerial statement about the serious disturbance that occurred at Ashwell prison, Rutland on Easter Saturday. Prison Service staff acted with exemplary skill and professionalism in dealing with the riot. I thank them sincerely, as I do officers of Leicestershire constabulary and other emergency services who so ably assisted. Prison Service and police investigations are now under way.
	Investing in prison and probation services has been a key priority for this Administration. Prison places are up by nearly 25,000, to 85,000, with spending rising by a similar proportion. The probation case load has risen by 52 per cent. since 1997, but spending has increased by 70 per cent. in real terms. This is the first post-war Government to see a sustained reduction in crime—down 39 per cent. since 1997, with the chances of being a victim the lowest for a generation. There was a 23 per cent. fall in adult reoffending between 2000 and 2006.
	Understandable concern has been expressed about the numbers of juveniles and women held in custody. There has over the past year been a reduction of 8 per cent. in the number of juveniles in jail, while the number of adult women prisoners has fallen by 3 per cent. over the same period. In response to my noble Friend Baroness Corston's recommendations, I have committed £15.5 million over two years to help divert vulnerable women offenders from prison. We also want the Prison Service and the NHS better to deal with offenders with mental health problems. My noble friend Lord Bradley's report on this will be published shortly.
	My noble friend Lord Carter of Coles was asked in 2007 to consider how better to manage short and medium-term prison pressures. I published his report alongside an oral statement on 5 December 2007. Since the publication of Lord Carter's report we have already provided an additional 3,500 prison places. Lord Carter recommended that net capacity should be brought up to 96,000 by 2014 and that 7,500 of these places should be created by the construction of three 2,500-place prison complexes, described as Titans. In June last year we launched a consultation on those proposals. I am most grateful to all those who responded. The Government's response to the consultation is published today, along with the document "Capacity and Competition Policy for Prisons and Probation" and an economic impact assessment. Copies are available in the Vote Office and the House Library.
	Once a prison is established in an area, almost without exception the local community becomes very supportive of it. A prison is a source of secure, well-paid employment and a focus for much highly creditable volunteering. The research evidence, which shows that prisons have no adverse effect on house prices or crime rates, is then borne out by experience, although proposals for new prisons can at first be controversial.
	I did see merit in Lord Carter's proposals for 2,500-place prisons, especially as they would have been complexes with four or five distinct and separate regimes, but most of those whom we consulted took a different view, and believed that the advantages were far outweighed by the disadvantages. Not the least of those of that view was Dame Anne Owers, Her Majesty's chief inspector of prisons.
	I have looked very carefully at everything that has been said and, in the light of the consultation, concluded that the right approach is to deliver the 7,500 places not through Titans but through five prisons holding 1,500 offenders, each divided into smaller units. We already operate successfully a number of prisons at or around that size.

Jack Straw: We will leave that to one side for a moment.
	The new prisons will be neither Victorian replicas nor large warehouses. They will be modern, purpose-built institutions for adult male prisoners only. They will be safe, secure and effective in helping prisoners deal with their offending and develop the work, education and life skills that they need to turn their lives around.
	I can announce today that we are working to secure sites for the first two 1,500-place prisons at Beam Park West in the London borough of Barking and Dagenham, and at Runwell in the borough of Chelmsford in Essex. Both prisons will be privately built and run, and their construction and operation will sustain many hundreds of jobs. Prison capacity planning depends crucially on projections of future demand and judgments about the cost-effectiveness and appropriateness of replacing older places with new capacity. Those and other considerations are kept under constant review, and further decisions about sites and the removal of older provision will be announced in due course. However, in that context, I can tell the House that we will not be pursuing a prison on the Omega site in Warrington.
	Work is already in hand to increase capacity by approximately 8,500 places over the next three years. It also remains my intention to withdraw the end-of-custody licence scheme as soon as safely possible. The expansion will include two new public prisons, Isis, adjacent to Belmarsh, and Coltishall, a former RAF base in Norfolk; and two new private prisons, Belmarsh West and Maghull. We are also expanding HMP Littlehey, near Huntingdon, to provide 480 places by early next year, as a quicker, more cost-effective option than buying and converting a prison ship.
	At all times, but especially in today's economic climate, we have a duty to ensure that prison and probation services work as efficiently and effectively as possible in the interests of the public. We are seeking to improve the efficiency of public sector prisons through reforms to work force structures for new uniformed staff and by reducing management costs. From today we will consult on the detail of those plans.
	Nearly 90 per cent. of prison places are delivered directly by the public sector, but the private sector also plays an important part. The Government's approach to competition was described in last November's pre-Budget report and in last Wednesday's Red Book.
	I have already set out the situation for new-build prisons. Five existing prisons have previously been subject to competition. Of those, Manchester, Buckley Hall and Blakenhurst are run by the public sector, and Doncaster and Wolds are run by the private sector. Each will be subject to a new competition as their current contracts end. Blakenhurst now forms part of HMP Hewell, so we will put the Hewell cluster out to competition when the contract for Blakenhurst ends in August 2011. Two poorly performing public prisons will be market-tested this year—Birmingham and Wellingborough. Public, private and third sector providers will all be invited to bid in respect of those market tests.
	It is against a background of greatly increased real-terms budgets that the probation service is being asked to make some savings of low percentages this year and thereafter. Detailed analyses show that, historically, the work load and resources of probation areas have not necessarily been well matched—especially when measured against convictions, the key determinant of work load. So, we now seek to target resources better to match needs. We want to be clearer about the service that probation should deliver, to reduce administration costs and rigorously to manage contracts.
	The probation trusts programme gives areas greater control over budgets and enables the private and third sectors to provide more services. If probation boards fail to become trusts, then from 2010 options will include amalgamation into existing trusts or being put to competition in the open market. Probation court services will remain with the public sector, as required by the Offender Management Act 2007. Probation areas are now also required to review their services against a national "best value" framework. If services fail to meet the standards necessary, areas must improve performance or use competition to identify alternative providers. As the first services to be reviewed in 2009, at least 25 per cent. of community payback and victim contact services will be subject to competition in this open market.
	As I have already reminded the House, since 1997 we have provided nearly 25,000 places to accommodate the most serious, dangerous and persistent offenders; and we are committed to bringing the total number of places up to 96,000 by 2014—just five years away. Over the past decade, prison conditions have been transformed. As Her Majesty's chief inspector of prisons has acknowledged, prisons today are more decent, more constructive and considerably more secure. They are places both of punishment and reform. The measures I have announced today for expanding and modernising the prison estate, and for the management of prisons and probation, will allow us to realise still further improvements to public protection and reoffending, with maximum benefit for the tax-paying public. I commend this statement to the House.

Dominic Grieve: I thank the Justice Secretary for advance sight of his statement. I join him in paying tribute to the service and commitment of prison and probation staff, and police and emergency services, under such challenging conditions. May I therefore express my disappointment that once again he has trailed a major policy announcement in the weekend press, with the Government's usual disdain for this House?
	I should say at the outset that I welcome the Government's U-turn on Titan prisons; giant warehouses are no good for reforming prisoners or for protecting the public. However, the Justice Secretary first announced Titans amid great fanfare in 2007. Why has it taken almost two years to work out what Opposition parties, the chief inspector of prisons, the voluntary sector and prison officers told him then? Is it because the Government ran out of money, or because the policy ran out of spin? The stark reality is that this U-turn is the nail in the coffin of a flawed approach to tackling crime.
	Violent crime has nearly doubled under Labour, with Ministers advised to expect a further surge during this recession. The Justice Secretary has released more than 50,000 prisoners early, including 14 violent offenders every day, to grossly inadequate aftercare; and we have seen Ashwell prison virtually destroyed in a riot. Does he now at last accept that these systematic failures are the direct result of his Government failing both to provide enough prisons and to provide the right prison regime? Take prison numbers; more than half of prisons are overcrowded, and 70 per cent. of prisoners are in overcrowded cells; and on top of early release, dangerous offenders have been moved to open prisons to create space. We now face the possibility of serious unrest, with prisons bursting at the seams. Can he tell the House whether he received any warning from the Prison Service of the riot at Ashwell before it took place? Has he received any further warnings of possible unrest elsewhere?
	The current crisis is a direct result of reckless neglect by Ministers. Many will suspect that the sudden conversion over Titans is really just cover to delay or dilute the Government's pledge to provide the additional 15,000 places that we need, net, by 2014. Ministry of Justice officials advised only last year that 15 prisons would be needed to match the capacity otherwise provided by Titans, but the Justice Secretary is now proposing just five. Will these be mini-Titans, or is he reneging on his pledge to provide the extra places that we need within the timetable that his officials have said is necessary? We will look carefully at the particular sites that he now proposes. Can he explain what consultation process is under way for each site?
	Then there are the costs. The Prison Service already faces a black hole of nearly £500 million. How will the Justice Secretary fund these proposals? He says that he intends to end early release. Well, he has said that before. When will it end, and does he recognise that nothing can make up for the failure to invest in the prison estate since he was first warned of the looming crisis more than a decade ago?
	As I said, I welcome the abandonment of the Titan model in favour of smaller prisons, because we will never reform until our prisons until we reform the poor regimes that are the direct result of overcrowding. However, these proposals are too little and too late. Can the Justice Secretary confirm that more than half of all prisoners now have serious drug addictions, but that less than 10 per cent. are on rehabilitation programmes? Can he confirm that vital programmes in work and skills have been shelved because of the overcrowding, and does he accept that far from a reduction in adult male reoffending from prison, as he claims, there has in fact been a rise in reoffending from 57 per cent. in 1996 to 65 per cent. in 2006, at which point the Government fiddled the figures rather than tackle the problem?
	Turning to probation, the Justice Secretary has, I think, announced cuts. Will he tell the House how many probation areas will see a reduction in their budget, and can he guarantee that public safety will not be compromised? Amid the disinformation and bluster, two things are now crystal clear. The Government are papering over the cracks of a prison crisis that is entirely of their own making and, as the author of that failure, the Justice Secretary appears incapable of providing a credible solution.

Jack Straw: Let me respond to the hon. and learned Gentleman's points. First, on leaks, I can tell him—if he had been in my Department, this would have been visible and palpable to him—that I did not appreciate the leaks that took place. But the last party and the last individuals in the country to complain about leaks should be the Opposition and their Front Benchers. They actively encourage leaking, and they need to bear that in mind. They want a culture of leaking, in which people are not loyal to the Government of the day.  [Interruption.] Well, that is what he sought, and as one sows, as the good book says, so shall one reap.
	The hon. and learned Gentleman asked me why it has taken until now to alter the policy in respect of Titans—it has been altered, and I make no pretence that it has not been. Well, we had a consultation. Lord Carter of Coles was asked to produce a report, and he went away and produced it. I was attracted to his proposals, there was no dispute about that. I thought that large prisons, provided that they were divided into smaller units, would work and be cost-effective. On the face of it, the arithmetic was also very attractive. We had a consultation, and rather to my surprise there was overwhelming opposition to the proposals for very large prisons, not least because prisons had not been built on such a scale before. We had no experience of that, and experience abroad was, on the whole, not good. Yes, I did listen to people—I plead guilty to that. I have never had an ideological view in favour of 1,500 or 2,500-place prisons. I have a view in favour of prison expansion, but I happen to think that today's proposals are the better way, and a number of prisons of the size that I have described already exist.
	The hon. and learned Gentleman asked me about an advance warning about Ashwell. No, we received no warnings, and neither did anybody in the Prison Service, so far as I know. Nor have we received any warnings about any impending difficulties inside prisons, although he would not expect me to go into any detail if we had. Riots and serious disturbances take place from time to time in prisons, but since he was trying to imply that things had got worse since 1997, I shall say that actually they have got a lot better on almost every measure. There is 10 times the investment in drug treatment. I will send him explanations of this, but there are much better reoffending rates than ever before. After a temporary period when the prisons were under very serious pressure, they are no longer "bursting at the seams". The number of escapes has gone right down, to zero last year, and touch wood and please God that may continue. That can be compared with the early 1990s, when there were four escapes a week—so many that private offices did not bother to tell their Ministers, as they were seen as routine. Prisons are safer.
	On probation, we already told the probation services about some reductions in their budgets for the current year, but that budget was over their budget for last year. Since those services have underspent by getting on for £30 million, there will, in practice, be no cuts to budgets for this year.
	The hon. and learned Gentleman may wriggle, but the Conservative Government established a measure, which they said was the best measure of crime rates—the British crime survey. The Conservatives admitted that, according to the British crime survey, crime had gone up by 50 per cent. between 1981 and 1997. According to the same measure—theirs—it has gone down by 39 per cent. since 1997. We are the first Government since the war to get crime down and we are proud of it.

David Howarth: I also thank the Secretary of State for early sight of his statement—and for the advance warning I gained by listening to him on the "Today" programme. I also welcome the announcement that the extravagant and much derided Titan programme has been abandoned, but I do not welcome much of the rest of the statement. How is building five very big—dare I say Promethean?—prisons instead of three enormous Titan ones any sort of change of direction? Raising the prison population to 96,000 is inherently the wrong policy, even if the right hon. Gentleman has found a slightly cheaper way of doing it—although he failed to tell us precisely how much cheaper, and I will press him on that.
	By linking the fall in crime with the rising prison population, the Secretary of State seems again to claim that prison works, but will he not admit that crime rates have been falling since the mid-1990s in almost the whole of the western world—except, it seems, Belgium—regardless of whether countries have used prison more? In relative terms, Britain is in the same place now in the international league table of crime as it was then—in the top two. In comparative terms, the Government's prison expansion policy has made absolutely no difference to crime.
	Does the Secretary of State not recognise that the current financial conditions mean that the country can no longer afford that sort of posturing? As the Prison Reform Trust pointed out, we already spend an astonishing 2.5 per cent. of our gross domestic product on criminal justice. We now need to concentrate all our resources ruthlessly on what works to prevent reoffending and to prevent crime. We know that short-term prison sentences do not work. Three quarters of all young offenders reoffend within a year.
	Will the Justice Secretary now admit that his own Department produces briefings that clearly indicate what does work? For example, alcohol and drug treatment in the community both work. They work on the one hand to reduce violent crime and, on the other, to reduce acquisitive crime. We also know that restorative justice works to reduce both. He should be retargeting the overstretched probation and prison resource budgets on what works, not tinkering with the details of how probation and prison are delivered.
	The country can no longer afford to waste resources on policies, the only objective of which seems to be to curry short-term favour with tabloid editors. We would not allow tabloid editors to decide what sort of treatments should be used to prevent swine flu, so why should we allow them to decide what works to reduce crime? The game of punitive leap-frog between the Labour and Conservative parties is an expensive indulgence that the country should no longer tolerate.

Jack Straw: I note what the hon. Gentleman has said and I now look forward to every Liberal Democrat "Focus" leaflet across the country declaring the consequence of that policy, which is that dangerous and violent offenders and persistent drug dealers will no longer be sent to prison. As for crime rates, perhaps he will also ensure that not a single author of a "Focus" leaflet will ever claim credit for getting crime down in his or her area or criticise a Labour or Conservative council for some failure in the other direction.
	Frankly, the hon. Gentleman's remarks were waffle from beginning to end. What we know is this: of course it is true—there is almost a consensus on it in the House—that where possible, offenders should not be sent to prison. That is why we have put large sums of additional money into the probation service, including £40 million recently, to help the courts divert persistent offenders away from prison. The number of short-term prisoners has been going down. It is the serious offenders who are going to jail—the ones whom the hon. Gentleman seems to want to release.
	As for crime rates, all I can say is that there is a relationship between central Government and local government policies and whether crime goes up or down. That is, without question, the reality. The political choices that the public make about crime and law and order policies make a difference to whether their streets are safe or not.

Alun Michael: I know that the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), as the Chairman of the Select Committee on Justice, would have liked to be here, were it physically possible, in order to respond to today's statement on behalf of the Committee. As a member of the Committee, may I welcome my right hon. Friend's decision not to proceed with Titan prisons? I also welcome his reference to the drop in the number of young offenders held in custody and his intentions in relation to both the Corston report and prisoners with mental health issues. I must inform the House that the Committee found the report by Lord Carter deeply unconvincing.
	Members will read today's statement and documents with great interest, but my right hon. Friend will be the first person to acknowledge that the devil is in the detail. Will he undertake to continue to listen and respond to concerns from the Committee, not least on the need to invest in community sentencing and restorative justice, to make investments that work in cutting reoffending and, in particular, to get the judges to understand the value of such sentences? Will he also undertake to listen to what the Committee has to say about justice reinvestment and the work on the role of the prison officer that the Committee is currently engaged in?

Jack Straw: The hon. Gentleman will recognise that we have announced the two sites today, and a list was made public on Friday, in response to the hon. Member for Billericay (Mr. Baron), of the large number of sites that we have looked at. We have made relative assessments about those sites. I cannot make a prediction for ever and a day, but we have announced two sites today and the one to which the hon. Gentleman referred is not one of them. I would add that it is improbable that we would build two prisons quite so close to each other on such different sites.

Jack Straw: I am very well aware of the concern of parliamentary colleagues and the probation services across the Yorkshire and Humberside region. There are particular reasons for the levels of concern, and of course I am ready to meet with my hon. Friend and his colleagues. As the Minister of State, my right hon. Friend the Member for Delyn (Mr. Hanson), who has responsibility for prisons and probation, has just commented, Steve Wagstaffe, who is the new regional director of offender management for Yorkshire and Humberside is examining the budgets of those probation services with those services. If we need to make other decisions, we shall do so.

Jack Straw: It will not be an open prison and it will not be a category A prison. For different reasons, open prisons and high-security prisons most worry local residents. It will be a normal category B or category C prison. The precise decision will have to be made closer to the time of opening, but of course there will be a lot of consultation about that. In some areas—although not, as it happens, in my area of east Lancashire, where we want a prison but cannot find a site for one, despite active local authority support across the political spectrum—there is public concern about the siting of prisons. I understand that, and I saw for myself in Peterborough, for example, huge opposition to Peterborough's new prison when I was Home Secretary, but it now has a prison, which is working well and is publicly supported. I am glad to see the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) expressing his support for that.
	There will be anxiety, but these are very good, well paid, secure jobs—typically for those who have lost their jobs as semi-skilled or skilled manual workers, especially men, in manufacturing industries. This is really good news for the area, economically as well as socially.

Alan Johnson: With permission, Mr. Speaker, I should like to make a statement on the reports of human cases of swine influenza, known as the A(H1Nl) infection, in some parts of the world, notably Mexico and the United States of America.
	The outbreak began in Mexico on 18 March, and as at 9 pm last night, there have been over 800 cases and 89 deaths in that country. However, to date, only 18 cases in Mexico have been confirmed as being caused by the H1Nl virus, and it is highly possible that other, more routine causes of infection are also currently circulating in that country.
	On Tuesday last week, under the terms of the international health regulations, the United States reported seven cases of the H1N1 infection. On Friday 24 April, the United States Centres for Disease Control and Prevention confirmed that samples from Mexico contained the same virus as those in the United States. Twenty cases have now been confirmed in five different states of the USA, four have been confirmed in Canada and one in Spain. Suspected cases have also been reported from New Zealand, France and Israel, although it is important to note that these are suspected cases and have not yet been confirmed as the H1N1 infection.
	In the UK, 25 cases under investigation have been reported. Eight of these have proved to be negative, and three are currently undergoing further specialist tests. These three patients are in isolation wards in hospital, after recently travelling in Mexico. People who have been in close contact with them are currently being contacted. The remaining 14 suspected cases are undergoing initial investigation and the people involved are sufficiently well to be managed in the community.
	It is too early to say whether the cases in Mexico and the US will lead to a pandemic. Scientists do not yet understand the extent to which cases in Mexico and the US are linked and are not yet able to make a complete assessment of the health implications of this new virus.
	A pandemic is declared when the World Health Organisation raises the pandemic alert to phase 6. That means that there is widespread person-to-person transmission of a virus in the general population. At the moment we are at phase 3.
	The director general of the WHO, Dr. Margaret Chan, has declared that this is a public health emergency of international concern. The WHO is convening a committee of experts from around the world that is meeting this afternoon to review the situation and to determine what further action is required at a global level.
	In deciding the state of the pandemic alert, the WHO bases its decision on expert scientific advice based on the available epidemiological and scientific evidence. The range of symptoms in the people affected is similar to those of regular human seasonal influenza. It is important to note that, apart from in Mexico, all those infected with the virus have experienced mild symptoms and made a full recovery. The swine flu that has been isolated in Mexico and the United States is sensitive to the antiviral drugs Tamiflu and Ralenza. Those drugs are effective in treating the illness, provided they are taken quickly enough. They can also reduce the length of symptoms and usually their severity.
	I would like to outline the measures that we are taking in response to this significant health threat. The UK has been preparing for a flu pandemic for the past five years. We have established a stockpile of enough antivirals to treat more than 33 million people—half of the UK population. All NHS organisations have pandemic flu plans in place and the Department of Health is now working closely with the NHS to ensure that those plans can be put into action so that antivirals can be made available to the public very rapidly should we reach that stage.
	Over the weekend, the Government have been putting in place precautionary measures to implement the plans that we have been developing in case of more widespread infections in the UK. I have spoken to ministerial colleagues and my Opposition shadows this morning, and I will be convening a meeting of the Civil Contingencies Committee immediately following this statement.
	We have enhanced our port health checks so that passengers arriving in the UK with symptoms of illness are identified and assessed. Information is being made available to passengers arriving at ports and we have provided urgent advice to doctors. Should the virus start spreading widely in the UK, we propose to use our antiviral stockpile for treatment of symptomatic patients. We already have advance agreements in place with manufacturers, should a vaccine be developed, although it is important to note that it will be some time before scientists can develop a vaccine, as the virus is not yet sufficiently understood. Experts are currently examining whether vaccination with the regular, seasonal flu vaccine can in any way boost immunity to the H1N1 strain, and we are considering how best we can use the limited stocks that are currently available within the UK.
	Many people will wish to know whether they should wear face masks. Although we are aware that face masks are being given out to the public in Mexico, the available scientific evidence does not support the general wearing of face masks by those who are not ill while going about their normal activities. We are, however, urgently looking into how we can increase our stockpiles of face masks for health care workers who are treating sick patients. We have also established infection control guidance to support staff when treating or caring for people who have symptoms.
	We already have well advanced plans for providing information to the public in the event of a pandemic, in particular about what people can do to help themselves in the event of swine influenza being confirmed in the UK. Updated information is available on the NHS Choices and the Health Protection Agency websites. Further information is also available for health and social care staff on the Department of Health website. We are putting in place an information line containing recorded, up-to-date information for those who want to know more about this type of flu. In addition, NHS Direct is providing information to people who have recently travelled overseas and are worried that they may have symptoms.
	There are three key messages that I would like to stress at this stage. First, it is important to emphasise that in all cases outside Mexico the symptoms of this illness are mild and all patients have made a full recovery. Secondly, we can all take simple measures to prevent infection, in particular, covering one's nose and mouth when coughing or sneezing, and washing hands regularly. Anyone who develops flu-like symptoms should go home and contact their general practitioner. Thirdly, anyone who has recently travelled to the affected areas and is experiencing influenza-like illness should stay at home in order to limit contact with others and seek medical advice by phone from a local health professional or NHS Direct. In line with advice from the World Health Organisation, there are currently no travel restrictions on those who are planning to visit affected areas. Anyone who is planning to do so is advised to ensure that they take the measures I have outlined to prevent infection and consult a doctor immediately if they show signs of flu-like symptoms. In order to enable local health services to respond to the pressure that the possibility of a pandemic may put on services, we are working with primary care trusts to ensure that arrangements are in place to support that distribution arrangement for antivirals, should it become necessary.
	There is understandable trepidation and concern across the world. Here in the UK, we are monitoring the situation very closely, alongside the WHO and our international partners. The UK has been preparing for such an occurrence for a number of years, and the WHO has recognised that the UK and France are the two best-prepared countries in the world. I wanted to use this opportunity to update the House on what we know so far, but I shall, of course, keep Parliament fully updated on what is obviously a rapidly developing situation.

Andrew Lansley: I am sure that the House is grateful to the Secretary of State for making a statement at the first opportunity, and I was grateful for the opportunity to see it beforehand and for the conversation that we had about this matter this morning, to which he referred.
	May I express—I hope on behalf of the whole House—our sympathy with and support for all those in Mexico who have suffered as a consequence of this outbreak? I hope that, through the WHO, we will be able to continue to give the greatest possible support to that country. However, the current situation illustrates a point that we have discussed before in relation to pandemic preparedness: that an influenza pandemic would expose dramatic differences in the ability to respond in different parts of the world between the most developed countries and the least developed countries. The national reporting systems in Mexico are clearly not as good as they should be. For a month, several hundred cases had emerged in Mexico before the point last week when the CDC in Atlanta—the Americans' responsible authority in this area—on behalf of the WHO, became aware of the new strain and was able to trigger the necessary alerts. Clearly, the UK and developing countries are interdependent, and we should be supporting them and trying to ensure that we have not only better alerts, but the resources available to support such countries in responding more rapidly and more effectively to flu outbreaks.
	As the Secretary of State said, the United Kingdom is among the better prepared countries, and we have been discussing such preparations for nearly five years in order for that to be the case. If the WHO, which is meeting this afternoon, moves the alert status from phase 3 to phase 5, as is possible, given the nature of what we know, that will trigger a response in this country. As the Secretary of State implied, it is important for us not to assume that what is in the UK pandemic plan and its underlying assumptions about the likely profile of an influenza pandemic is what we will experience in this case. That plan is much more geared to more severe symptoms than we have seen in the cases that have emerged in America and elsewhere; this is, in a sense, more like the Russian flu of 1977, which was an H1N1 flu virus for which the vaccine was available within three months and the clinical attack rates and mortality rates were much lower than were assumed in the pandemic plan. We do have reasons to be optimistic, including the mild nature of the flu that has been experienced in other countries. However, we do not know whether there is a much greater prevalence in Mexico, with only the most severe cases going to hospital.
	It is important that we review our preparations, and I have several points to make in that respect. We have a stockpile of treatments, although in an answer on 12 January the Minister of State, Department of Health, the right hon. Member for Bristol, South (Dawn Primarolo) said that Department modelling had shown that prophylactic or preventive use of antivirals in a flu pandemic would be effective. That would require a stockpile of 75 per cent. equivalent of the population, rather than the 50 per cent. that we have at the moment. Perhaps the Government could tell us what further steps they have taken following that reply in January.
	The Secretary of State will also know that for four years we have told the Government that other countries, including France and Australia, have a strategic stockpile of face masks and gloves. It is not for distribution to the whole population, but it is to ensure that everybody in frontline care would be able to wear face masks and gloves. The Government say that they are urgently looking for face masks, but when SARS—severe acute respiratory syndrome—emerged the international supply of face masks disappeared almost overnight. It is therefore unlikely that the Government will be able to procure face masks very readily.
	The Secretary of State may be able to tell us something about vaccine research and our support for it. In November 2005, President Bush devoted $2.8 billion to improvement of vaccine technologies, and I hope that we can say that we are doing our bit, especially as we have some of the leading scientists in the area.
	If there is a change in WHO alert status, it will trigger a communication exercise with the public about our pandemic preparations, under the pandemic plan. On 22 January, my hon. Friend the Member for Rutland and Melton (Alan Duncan) asked for a debate in Government time on pandemic preparedness, but the Government have not given us that. I wish that they had, as it is better to discuss the issues raised by a pandemic before it happens rather than when we face the immediate prospect of it happening. None the less, will the Government now accept that request?
	The flu contingency plan states that if a WHO phase 5 alert is declared UK Health Departments will run a national door-drop and advertising campaign. Are the Government ready and willing to do that, were it to be triggered today? Why is the EU Commission offering travel advice while WHO and the UK Government are not? Will those who are travelling to Mexico or the south-west states of the US have access to antiviral treatments for prophylactic purposes on the NHS, rather than just through private prescriptions, to reduce the risk of transmission?
	I welcome what the Secretary of State had to say about updating the House regularly and I heartily endorse what he said about the general importance of hand hygiene. I look forward to further updates in due course.

Evan Harris: I, too, want to thank the Secretary of State for coming to the House at the earliest opportunity to give this statement on what must be a busy day for him as he assesses the advice that he is getting. My hon. Friend the Member for North Norfolk (Norman Lamb) wants to apologise for his absence.
	Does the Secretary of State agree that the difficulty in understanding the nature of the threat is caused by some of the mysterious aspects of this outbreak? Why do the cases appear so much more severe in Mexico than elsewhere in the world? Will the outbreak always be this virulent? Did it actually start in Mexico? The Secretary of State said he was convinced it did, although one cannot be certain that there were not sub-clinical strains elsewhere before the first Mexican report? Has the antigen drift made it less pathogenic as it has spread from Mexico? That is one cause for hope, and it is why we are seeing different pathogenicity elsewhere.
	How easily is the disease spread from human to human? That is not yet known, but how easily the disease is spread from human to human and whether that transmissibility is sustained as the virus changes, as such viruses do, will determine as much as anything else the extent to which the disease is likely to become a pandemic. Of course, we do not know what protection, if any, is available from the H1N1 seasonal flu vaccines.
	It is important to note that only one published paper on the two isolates from California has been available on the CDC—US centres for disease and control prevention—website. It is not yet possible to compare those isolates with the Mexican isolates to see whether the genetic changes—the genetic assortment that appears to have taken place, according to that paper, between the 1918 north American strain and the 1979 Europe and Asian strain—are replicated in all such cases. There are simply too many unknowns, so I share the Secretary of State's caution, but it is wise to assume that the worst may happen and to plan for it, which the Government appear to be doing.
	I have a number of questions. First, may I pursue the issue of preparedness in other countries? We are in a world of global travel, so the weakest link in surveillance and reporting will be the one that causes delay in bringing the virus to scientists to study so that public health experts can give advice. Will the Secretary of State say more about what we can do to improve surveillance and public health in areas such as central America—not just in Mexico—as we needed to do, and still need to do, in the far east in relation to the threat of bird flu?
	Is the Secretary of State certain that we have right the proportions of the antivirals, Relenza and Tamiflu? If there is a differential, and it is possible for the virus to become resistant to one but not the other, which would be unusual but possible, it might be good to have a balance of both. As I understand it, we have a preponderance of the oral form but not a huge amount of the inhaled version—for obvious reasons in terms of ease of delivery—and that might become a factor.
	Has the Secretary of State given any thought to what might happen if worse comes to worst and the buying of antivirals by asymptomatic people, privately or over the internet, causes problems for public confidence in the distribution system? I share his scepticism about the appropriateness of providing prophylactics to travellers, as that might be an inappropriate way, outside a country's plans, of introducing antivirals that could lead to resistance.

John Reid: There is absolutely no complacency on such issues, but we are all reassured that the Secretary of State has made a statement in the House immediately and that the UK has been singled out as one of the better prepared countries.
	The Secretary of State will know that I have a particular interest as one who initiated some of the preparations and as the MP for Monklands hospital. The situation at Monklands is being dealt with by the Scottish Government. I have been in touch with the local MSP, Karen Whitefield, and the Minister, Nicola Sturgeon, who has acted with commendable speed. Will the Secretary of State reassure the House that there will be maximum co-operation, liaison and exchange of information between the devolved Governments and central Government, because something like this is no great respecter of borders inside or outside the United Kingdom?

John Baron: I beg to move,
	That leave be given to bring in a Bill to amend the law relating to the regulation of domestic energy providers; to require an energy company to publish on invoices information indicating whether the customer is on the cheapest tariff offered by that company, based on pattern of energy use, and the savings to be gained from any switch to this tariff; and for connected purposes.
	The idea behind the Bill is relatively simple—too many consumers are paying too much for their energy consumption. Energy companies could do more to provide information to highlight where customers could find cheaper tariffs.
	I am grateful for the cross-party support for the Bill, as can be seen from the names of sponsors from both sides of the Chamber. It is supported by those who signed early-day motion 749, from which the Bill is drawn. I welcome Conservative Front Benchers' support for the Bill. When I raised the matter with the Secretary of State for Energy and Climate Change in the House, he described the idea as "ingenious". I welcome the third-party support outside this place from groups such as Consumer Focus, Which?, the Energy Action Group, Help the Aged and Age Concern, which have all lent their support to the debate.
	The Bill's aim, I hope, is to help consumers realise that perhaps they need to do more to achieve cheaper tariffs. It is designed to help all consumers, but particularly those in fuel poverty. We know the definition of fuel poverty: 10 per cent. of a household's income being spent on keeping their living areas warm. It is much easier, however, to quantify the issue itself, because Government figures are at least two years out of date and the independent group Consumer Focus estimates that about 5 million households are in fuel poverty. If we needed evidence of that, we might look only at the winter of 2007-08, when something like 22,000 people over the age of 65 of a cold-related illness—far more than in many European countries with colder climates.
	Constituents often write to me—I am sure I am not the only Member who receives such correspondence—and graphically describe how they have to deal with the effects of high energy and food prices. Indeed, they often have to choose between the two. One constituent said that he could afford only one hot meal a week and lived off biscuits and bread, because he could not afford the high energy prices he was charged.
	We know that too few consumers switch between suppliers. Ofgem is looking at the issue and has suggested that an annual prompt, reminding consumers how they can switch from one supplier to another, would be a good idea. Often, however, the problem is that consumers do not know whether they are on the cheapest tariff with the energy company that already supplies them. That is the point of the Bill; it is designed to make all that information much clearer. By way of early-day motion 749 and the Bill, I have suggested that energy companies be obliged to provide information—assuming the customer is on a direct debit and has online access—about whether their consumers are on the company's cheapest available tariff, given their pattern of energy use. There should also be clearer information on energy company bills about whether savings could be accrued if the consumer were to switch to the cheaper tariff.
	That is the bare minimum of information, and much more could be included in the energy bill. Certainly, more tariffs, including social tariffs, could be put on bills to ensure that all consumers saw whether they were on the cheapest tariff. The proposal has various advantages: consumers would be able to see how much they might save if they switched; it would act as a reminder and allow people to see whether consumers take advantage of the latest discounts; and it might encourage some consumers to pay by direct debit or set up online access, which could help with their bills, and might even help the energy company itself.
	The fact that bills are too complicated is beyond doubt. Which? estimates that, on average, there are 15 tariffs per energy company. If we take into account all the variants, including payment methods, special offers, discounts and so forth, we see that there are about 4,000 different tariffs, and the evidence clearly suggests that that is all very confusing. I have recently seen evidence to suggest that a quarter of all those who switch, and up to half of all those who switch as a result of direct selling on the doorstep, switch to a worse tariff. That is clear evidence that there is a lot of confusion out there. Until recently, a customer on a social tariff had no guarantee that they were on the cheapest tariff. Thankfully, Ofgem has taken some action to try to put that right, but it clearly illustrates that there is widespread confusion with regard to this plethora of different tariffs.
	That is wrong. We need simple measures, with energy companies putting on bills information about the cheapest tariff, given certain preconditions. Payment by direct debit and online access are two of the preconditions. However, that is a bare minimum—it does not prevent energy companies from adding other tariffs, including social tariffs, to try to ensure that they meet their social responsibility to help the customer to achieve the cheapest tariff possible.
	The direction of travel is in our favour. Ofgem is considering the issue. It has suggested, for example, that energy companies might be required each year to display on their bills the customer's usage against an average group of tariffs and declare whether the customer has paid a premium. That is a step in the right direction, and it is to be welcomed. However, an annual statement is not good enough. This prompt—this comparison with cheapest tariffs—should be issued when consumers get their bills through the door, because that is when they are most aware of their tariff.
	We all accept that energy companies need to make a profit—there is big investment to be made in the infrastructure and so forth—but at the same time they owe a social responsibility to their customers, and that needs to be met. The industry has made some helpful moves. Energy companies have introduced social tariffs and funded the Home Heat helpline, and the Energy Retail Association and Citizens Advice have been helping customers, but they could take this one further, very simple step to help customers to achieve the cheapest tariff. That would create a lot of good will for them and do a lot to help consumers with their bills at this time of very high energy and food prices. Ofgem is heading in the right direction, and the industry is trying to make moves to help consumers, but we need a clear message from Parliament on this issue. I therefore commend the Bill to the House.
	 Question put and agreed to.
	 Ordered,
	That Mr. John Baron, Mr. Lee Scott, Mr. Frank Field, Mr. Peter Kilfoyle, Nick Harvey, Mr. Peter Ainsworth, Mike Penning, Dr. Kim Howells, Mr. Peter Bone, Dr. Ian Gibson, Mr. David Laws and Dr. Richard Taylor present the Bill.
	Mr. John Baron accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 16 October and to be printed (Bill 87) .

Debate resumed (Order, 23 April).
	 Question again proposed,
	That,—
	(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
	(a) for zero-rating or exempting a supply, acquisition or importation,
	(b) for refunding an amount of tax,
	(c) for any relief, other than a relief that—
	(i) so far as it is applicable to goods, applies to goods of every description, and
	(ii) so far as it is applicable to services, applies to services of every description.

John Denham: I agree with my hon. Friend. The approach taken by the Opposition when they opposed the fiscal stimulus is one that would have been designed to hammer the sort of family whom she met in her constituency last week, taking away the support that is now being offered through tax cuts, which boost family budgets, and the support for people who lose their jobs. That is wrong at the level of the individual and the family and it is wrong at the national level, too.
	Taken together, the policies advocated by the Opposition would take billions of pounds out of the economy now, and away from British business now, in the middle of the recession. It is the wrong time to do that, when a struggling private sector needs public sector support and investment. The Opposition make the wrong judgment today, as they did last year in the banking crisis. If we followed their advice, the recession would last longer, the recovery would be slower and the cost would be greater in the long run. It is a mistake to believe that their cuts would help us out of the recession. We have to invest and grow our way out of recession.
	It is on that point that the Opposition make their third defining misjudgment, because they cannot offer British business and the British people the support that they need to grow this country for a more prosperous future. Our Budget builds on the measures that we have already taken to get lending and credit going again following the banking crisis, to boost the economy and to provide extra support for skills training for those who lose their jobs in order to get them back into work.

John Denham: No, I am not aware of any country that is proposing to pursue the policies being advocated by Her Majesty's official Opposition. The reason is that in those other countries the judgment is that opposition to a fiscal stimulus, opposition to necessary borrowing and an insistence on cuts would mean that those Governments would not be able to take the measures that need to be taken to support their businesses and families, and exactly the same would apply if we followed the strategy being advocated by the Opposition. If we did that, we would not be able to take the measures that we have set out in the Budget.
	If we followed the Opposition's advice, we would not be in a position to enable more than 100,000 firms to benefit from HMRC flexibility on payment. We would not be in the position in which the Government have signed £1 billion of guarantees under the working capital scheme or in which nearly £290 million of applications from 2,500 small businesses were being dealt with under the enterprise finance guarantee. Nor would we be in a position in which the Government strategy in this Budget has enabled us to extend more support for businesses' short-term cash flow.
	If we listened to the Opposition, we would not be in a position to enable businesses to spread this year's business uprating over three years. We would not be in a position to extend enhanced loss relief, allowing losses to be offset against tax bills due on the previous year. That alone will benefit 140,000 firms. We would not be in a position to introduce a top-up trade credit insurance scheme to help businesses to maintain their finances. Because we recognise the importance of the motor industry now and in the future, we are able to complement the £2 billion loan guarantees that we have made available with a time-limited vehicle scrappage scheme to boost sales and lower emissions.
	The House and the country need to know that the Opposition cannot promise any of this support for British business. Their only proposal to date has been a national loan guarantee, but they set aside no money to pay for it—as ever. It was, of course, the shadow Business Secretary who said that the taxpayer would take a hit, but the rest of his Front-Bench team have refused to provide any finance for the scheme, and it was an empty promise.
	While we are supporting business, we are also supporting individuals and families who have been hit by the downturn. Once again, the Opposition have to admit that their ill-judged economic strategy means that they could not match these measures. In total, the Budget provides an extra £1.7 billion to help people to get back into work quickly and to guarantee a job or training for young people. We have already begun to provide more than 100,000 retraining places for those losing their jobs; now, we will be able to invest an additional £260 million in training and recruitment subsidies to help young adults aged 18 to 24 who are approaching 12 months of unemployment to get the skills that they need to get into work or to guarantee them a job offer. A further £655 million of funding from the Budget will enable us to deliver more opportunities for 16 to 18-year-olds in schools and colleges next year. There will be more than 250,000 apprentices starting this year—nearly four times more than in 1997—and more students will be going into higher education than ever before: 40,000 more than two years ago.
	Recognising that this year's graduates face a more challenging labour market, we have already announced 2,000 new paid internships supported by the higher education economic challenge fund, and we will build on that in the weeks to come. Following an agreement with my right hon. Friend the Secretary of State for Work and Pensions, graduates already claiming jobseeker's allowance for six months or more will be able to do a work experience internship for up to 13 weeks alongside claiming benefit and looking for work. We will continue to invest in Train to Gain. It is a hugely successful work-based training scheme that is popular with employers, and it will soon be training about 1 million people a year. It is typical of the Conservatives that they have already promised to scrap it.
	The Budget commitment to an additional £300 million of capital spending for further education colleges in this spending review period, and a further £900 million in the future, will be widely welcomed. It will bring around £400 million worth of extra work for the construction industry in the next two years, creating jobs and apprenticeships.
	The shadow spokesman for Innovation, Universities and Skills has already warned the colleges not to rely on the Conservatives to match even our previous spending plans for 2010-11. It is because they have made such a fundamental misjudgment about the nature of the challenge that they cannot match the measures that I have outlined. That is why the choice is so important. The Conservative party—  [Interruption.] The hon. Member for Bexleyheath and Crayford (Mr. Evennett) says from the Opposition Front Bench that I do not believe that. I believe it profoundly and absolutely: the choice between the political parties—between the Government and the Opposition—is more stark, more marked and more clear today than at any time in recent years.

John Denham: My hon. Friend the Minister, who has responsibility for colleges, has met an enormous number of Members of Parliament, who understandably have had concerns about the FE capital programme. I am quite sure that if he was not able to meet the hon. Gentleman today, he will be able to do so in the not too distant future.
	There is an even more fundamental flaw in the Opposition's thinking. As Britain recovers, we will need to grow an economy that is better balanced and more equitable. Yes, the finance sector will still have an important role to play, but we need to grow British businesses in all the sectors where we have the ability to compete and lead around the world—the digital economy, life sciences, renewable and nuclear energy, electric vehicles and low-carbon advanced manufacturing—as we move towards a low-carbon economy.
	The huge potential is there, founded on the record doubling of investment in science and research over the past 10 years—this Budget maintains the science ring-fence on the research councils budget—but we cannot just hope to exploit our potential. We must make it happen and the Government have a key role to play—working with markets to ensure that British companies and British employees have the best chance of competing fairly but successfully, here and abroad, in those huge new markets.

John Denham: The right hon. and learned Member for Rushcliffe (Mr. Clarke) can probably give a better lecture on the dangers of setting targets for exchange rates than I can. We tend not to set targets for exchange rates and steer well clear of that topic.
	The reason for setting out the approach that we need to build areas of the economy where we have competitive advantage is that it highlights another investment that we can make because of how we are responding to the global downturn which is available to us and not to others. The Budget has created a new £750 million strategic investment fund to support advanced industrial projects of strategic importance. Part of that is earmarked for crucial investment in low-carbon industries, which together with other public and private investment will create a £1.4 billion programme of targeted support for the low-carbon economy.

John Denham: The truth is that because of the investments that we have made, we can prioritise that key energy sector, which is important in our national interests and also for its growth potential in British business, with the confidence that we do. The point that the hon. Gentleman should perhaps accept is that without the crucial investment that we have set out in the Budget, which would not be available from the Conservative party, the policy would not come to fruition. I am pleased that we are making the investment and that we are also creating a broader policy framework for the development of renewable energy. This country will benefit from it in future.

John Denham: Of course, my hon. Friend is right. I have set out my views on that and the assurances that he wants are in speeches to the Royal Academy of Engineering and others. The Minister with responsibility for science, my noble Friend Lord Drayson, has done the same.
	It is important to maintain fundamental research, but that does not mean that we cannot ask questions about how we organise our research effort to ensure that we get the maximum economic benefit from it. That very important discussion with research councils is actively under way.

Kenneth Clarke: I am delighted to follow the Secretary of State. I have been an admirer of his over the years. In my opinion, he was correct about the invasion of Iraq, and more than any other opponent of that folly he was very courageous about it, so I am delighted to see him back in office. I may be quite an admirer of his, but I must say that I was disappointed today. He took the classic current Brownite pre-election strategic line of a clear division between the parties. The ground is very carefully chosen. The Secretary of State is not Mr. McBride; he is not Charlie Whelan. The argument used was quite bizarre—a description of the amazing cuts that we propose now, as opposed to the Government's continuing generosity and fiscal stimulus, showing the clearest divide for a very long time. At one point the Secretary of State actually had the nerve to say that he believed it. I think better of him; I do not believe that he does. I was almost as shocked on discovering he had been to a gym, which I would never do in the course of a Government visit.
	What we have advocated is that the process of efficiency savings should be started now. There is no policy advantage in continuing waste that one could avoid if one identified it, but we have not ever advocated fiscal tightening at the bottom of the recession. We have advocated spending the fiscal savings on help now for those unfortunate people leaving school and university. We have advocated a programme to provide masterships, to provide more training places and to do something to help those who need to develop their skills as, thanks to this recession, they will not get jobs. We proposed an easing of the tax on savings, because pensioners living on their savings, have in particular innocently been dreadful sufferers of what is happening.
	We did allocate the money elsewhere, and our fiscal tightening comes later, unlike the Government's, which is cynical. They propose bigger figures for efficiency savings and appallingly tight public spending programmes—we do not know yet whether that will be adequate—but everything that they propose starts after an election, and this year there is to be inactivity. I shall not go further into that, but I should say that this is a bizarre attempt to conduct a serious debate if it is to continue all the way to the next general election, as is possible.
	I wish to deal with the two serious questions that the Secretary of State asked— how we got here and what the problems are—because he accused the Opposition of not understanding the situation and how we reached it. He said that we said that this was a totally and uniquely British recession—of course it is not. It is now a serious global problem, but there are serious reasons why the British were heavily involved in its origins and why we will probably be more severely affected than others because of the policies of this Government.
	I wish briefly to give my analysis, which I do not believe to be terribly controversial, of how we reached this situation. The most serious financial and banking crisis that anybody alive has seen hit the United States and the UK first of all, and that earthquake was followed by a tsunami effect, which is engulfing the real economies of other countries, including the exporting nations such as Japan and Germany, which thought that they would be immune to the collapse in their principal customers but have not been.
	Let us just think that through. The financial and banking crisis was created in New York and in the City of London during the Blair-Bush-Brown years and had two causes, one of which was the folly of bankers and the abuse of the devices of securitisation, which enabled ever-mounting risks to be taken off the balance sheets. People believed that they were disposing of the risks by transferring them away from balance sheets and that traditional risk management did not matter—that happened on both sides of the Atlantic. We have heard a lot about sub-prime mortgages, which were the first symptom, but this was not some funny version of swine flu that broke out in the mid west of America and spread. Nothing happened in the markets of New York that did not happen in the markets of London. In this country 120 per cent. mortgages and mortgages for five times people's earnings were given—sometimes those earnings were self-certified. We did not use the American jargon of "sub-prime mortgages" here, but we did have the financial folly.

Kenneth Clarke: I will happily deal with both those points. First, on the point about VAT, I voted against the measure when I had the liberty of the Back Benches. I made a speech at the time, which one can look up, about why I voted against it. When I was asked by The Times—and not on television—what would be the best form of fiscal stimulus, if one went in for it, I said that in my opinion if it was affordable the best form was a reduction in sales tax, or VAT. That does not have an immediate effect, but when it is increased again after a temporary reduction it brings forward sales of big ticket items. That was my view at that time. I added the rider, as I emphasised in the interview, of, "If you can afford it." I do not think that deficit countries such as the UK can afford fiscal stimulus. Fiscal stimulus is for China, for Germany and for those who have managed their affairs so that they are in a position to give it. When I took part in the exchanges about the pre-Budget report, I put it on the record that in my opinion we could not afford fiscal stimulus and that however desirable it was, it was reckless. I voted against it when it was proposed.
	I will not go into all the theories about whether this situation had its mysterious origins in our deregulation and the big bang. I have heard Mrs. Thatcher blamed. There are those in the banking world who say that it has all been got up by the newspapers. I thought that those theories were going out now, however.
	Let me address what would have happened if we had carried on. It is highly improbable that we could have won an election in 1997. In the highly unlikely event of a Conservative Government's continuing, I am quite sure that we would not have got into this position. We would not have transferred responsibility for the regulation of the banks from the Bank of England to the FSA or anything like it. I had the misfortune to be the temporary occupant of this seat on the Opposition Front Bench, because we had just been defeated and did not yet have a shadow Cabinet, when the then Chancellor made his announcement on that point. I did not know what to say, because I did not know what on earth my colleagues were going to say that their policy was afterwards. It took me by surprise and took the then Governor of the Bank of England by surprise—he threatened to resign—because nobody knew anything about it until about 20 minutes before the present Prime Minister, who was then Chancellor, got up and announced it. That was a disaster, which we would not have introduced. Indeed, it never crossed my mind to do any such thing when I was in office.
	More importantly still, we had fiscal rules of a balanced budget over the cycle, which we were sticking to, which we would have stuck to and which we would not have departed from. Indeed, the only period when this Government had a period of fiscal responsibility was when they at least honoured their election commitment to stick to my figures. They were prudent for three years, anchored by the fear that they would be accused of being old Labour if they did not stick to my figures on tax and spending. So, the public finances improved and they got into surplus. The dotcom bubble made them go into surplus—we would have achieved it, too, and we would have stuck to it.
	The new Government's fiscal rules turned out to be fiction. Let me give one quote to show the Prime Minister's approach. The Prime Minister regarded his fiscal rules as a challenge to the Treasury and himself to produce some statistics to show that they were still abiding by them year in, year out, when everybody knew that they were totally discredited and were not being adhered to at all. The hon. Member for Wakefield (Mary Creagh) will remember that extraordinary process whereby the dates of the cycle kept changing every year when we had Budgets, in a ridiculous attempt to show that a tax-and-spend Chancellor who was accruing enormous debts, despite the fact that we were in the middle of a boom, was sticking to those fiscal rules.
	It is no good saying, "I told you so", but I have quotes from 2002 and 2004. All Members, including me, like to quote themselves, but those quotes just show the folly during that period, which led us to where we are now. In the debate on the pre-Budget report on 6 December 2006, I told the then Chancellor that he was
	"only extending our record-breaking period of growth and stability on a sea of mounting public debt and consumer debt".—[ Official Report, 6 December 2006; Vol. 454, c. 321.]
	The answer I received was the most staggering of errors. He dismissed, as he always did, my mounting fears each year about where public debt was going and how sustainable it was. He said that I should be congratulating the Government on their achievement.
	More recent examples show the unreality that afflicted this Government 12 months ago, when they said that we were unaffected. Unreality affects them when they concoct this curious division for their argument at the next election, but let me give a quotation from the present Prime Minister that is more recent than 2006—although I can go back to 2002, when he started ignoring my warnings and those of many other more authoritative people than me. He said:
	"We keep borrowing under control and we also keep debt under control and I think the reason that we've had an economy where America's had a recession, Germany's been in recession, the Euro area's had very difficult times, Japan has had a terrible time, but we have managed to continue to grow sustainably and stably over the last ten years and continue to grow this year, and we're the fastest growing economy of the G7 this year".
	He said that on the "Today" programme on 7 January 2008—a little over 12 months ago. Is it any wonder that the Secretary of State comes here, duly following the line that he has to take and living in a world of apparent unreality about the political debate, about where we are now and about where we are going? He is in a Government led by someone who I increasingly believe now to be completely in a world of his own, and who has been in a very dangerous world of his own so far as our national economy is concerned for a very long time. The problem now is overwhelmingly debt and the effect that it will have.
	I thought that we might hear of green shoots. That would have been a better aspect of the occasional stray line from Ministers than what we heard from the Secretary of State, but green shoots have been firmly removed from the line that should be taken so we did not hear of them from the Secretary of State. I hope that we have some green shoots soon. If it were possible to believe that we were going to see growth by the end of this year, which is where the Chancellor has shifted to, and we were going to have boom conditions, no one would be happier than me. Of course we need a revival of the economy, but I do not think that that will be the case.
	As we go into this 12 months of inactivity and as the Government claim that they are saving the nation from the risk of a debt-cutting Conservative Administration, it seems to me that the objective view of what is happening now is that the rate of decline is decelerating. Things are still getting worse, but they are not getting worse at the same speed as they were during the two months after Christmas. That is a perfectly fair and objective description of where we are. The rate of unemployment is still going up, and what has horrified me about that since Christmas is that no one recalls unemployment going up this quickly. The figure has been higher and we do not where it is going on this occasion, but its rising at such a rate is a horrific thought. I hope it slows down.
	The one good thing I can see is that there are some signs of a return to normality in the credit markets. Things have eased a little—let me not be a total Jeremiah—but they are nothing like back to normality and the recession will not start to turn in this country until ordinary credit at ordinary cost is available to a solvent business, which it still is not, but spreads are improving slightly.

Stephen Williams: We are having this Budget resolutions debate in truly extraordinary times. I first took an interest in politics as a teenager in the mid-1980s, at a time when unemployment was at an all-time high of 3 million. I hoped at that time that we would not see unemployment return to those levels again, yet that is now being predicted.
	The year 1983 was when the Labour party was rejected emphatically by the electorate for its policies, especially its policy of full-scale nationalisation. Little could I have imagined that there would be a broad consensus now that some of the banks should be nationalised. I would have been staggered to be told that the public sector borrowing requirement, which was £12 billion in the mid-1980s and £50 billion when the right hon. and learned Member for Rushcliffe (Mr. Clarke) was Chancellor, would now be £170 billion.
	The recession may well be global in its manifestation, as the Secretary of State for Innovation, Universities and Skills was keen to emphasise, but some of the origins of the recession being visited upon this country have their origins in the UK, and we are led by a Prime Minister who, as Chancellor, repeatedly ignored many of the warnings. We are in a national emergency that requires swift and meaningful Government action. What has been swift is the welter of announcements from the Government. The Government spin machine has been in overdrive, recycling many initiatives and promising money, some of which is deferred until well into the future.
	The debate today is being led by the Departments for Business, Enterprise and Regulatory Reform and for Innovation, Universities and Skills. As the Conservative spokesman, the right hon. and learned Member for Rushcliffe said, Lord Mandelson was wheeled out last Monday in order to promote a document that I, too, thought was full of waffle about new industry and new jobs, to which was added a press release from the Secretary of State for Innovation, Universities and Skills. The press release and the document were full of hyperbole—for instance, that we should all look forward to the day when
	"the world's economy . . . is set to double in size creating major new opportunities for British business."
	As the right hon. and learned Member for Rushcliffe said, there is little in the way of tangible policies in the document or the press release accompanying it. One of the few specific pledges was to make the Technology Strategy Board, an estimable organisation with an important purpose, into a world leader, but in the Budget last Wednesday, what does the TSB get? Just an extra £50 million.
	The document is certainly right in identifying a major problem in the British economy—the shortage of venture capital and long-term finance for innovation. As I know from my own meetings with the biotech industries in this country and with many university spin-out companies in Bristol and elsewhere, that shortage holds back British innovation. We will have to see whether the strategic investment fund announced in the Budget will make a long-term difference.
	My favourite quote from the document and the release, which I am glad the right hon. and learned Gentleman did not quote directly, was that Lord Mandelson thought the Government should be a
	"smarter, more joined-up Government that understands the importance of creating wealth".
	The Government have been in office for 12 years. It shows what a parlous state they are in when, after 12 years, the Secretary of State for Business, Enterprise and Regulatory Reform, who had to be brought back from Brussels to rescue the Prime Minister, says that the Government need to be smarter and more joined up. Humility, at last, perhaps, but we did not see much of that humility reflected in the Chancellor's Budget speech.
	We are in a tough business environment. Jobs have been lost in retail in all our constituencies. Whatever the differences about the VAT cut, it is not at all clear whether that has saved any retail jobs. Jobs have been shed also in the financial services industry. Last week Royal Sun Alliance announced the closure of its office in my constituency, Bristol, West, with the loss of 500 jobs. There is much uncertainty in Bristol about our financial services industry, and I hope that closure is not a warning of things to come.
	We are in a tight professional jobs market. It will probably the worse jobs market for graduates for over a decade, and I would not want to be a school or college leaver at present. For many young people, it will be their first experience of a recession. What has the Government's response been? In the Budget, they announced a precise sum, £260 million, for the youth guarantee for skills and employment for 18 to 24-year-olds, but only if they have been unemployed already for at least 12 months.
	It is not clear what that £260 million is intended to fund. People up to the age of 25 are already entitled to have their level 3 training costs funded in full. It appears to rely on a subsidy for charities or local authorities to take on young people. Again, despite the fact that it is a precise sum, the outcome seems rather meaningless. It would have been much better to remove the remaining fees charged for further education college courses that apply to those over the age of 25, or to fund fully the off-the-job training costs of young apprentices.
	All those skills are delivered in the further education sector, and the fiasco of the FE capital expenditure budgets has already been mentioned. College building programmes are at a standstill around the country, together with the standstill in the housing market and the commercial property market. There are cranes all over the city centre of Bristol that have been idle for months, and people in the property market have been laid off.

Stephen Williams: I thank my hon. Friend for making that important point. Not only does the relief that is currently available need to be better promoted, but it is a relatively modest sum, which could perhaps be extended in order to make a difference.
	In the construction industry, redundancies have increased fourfold over the past 12 months, and there has been a 5 per cent. contraction in its sectoral GDP, yet in the Budget the Government announced only an extra £300 million for the college building programme—nowhere near enough to meet the pent-up demand. That sum appears to have been raided from the budget allocation for next year, 2010-11, and in the Secretary of State's letter to the sector, there is an "assumption" of extra money for 2011-12 onwards, but nothing concrete for the future. Colleges deserve better, and the construction industry could certainly do with a boost.
	In higher education we saw last week, with the release of the latest statistics from UCAS, that there has been a large rise across all age groups in applications to universities. In England, for the traditional age group of under-20-year-olds, there has been a 6.5 per cent. increase in applications to study at English universities. For those over the age of 25, there has been a 17 per cent. increase in applications. There is obviously a developing pattern of young people choosing—rightly, perhaps—to go into higher education in order to shelter from the recession. When people are offered places, or later in the summer when they get their A-level results, there will not be sufficient supply to meet the demand.
	A year ago the Secretary of State promised 15,000 extra places for higher education. Then there was the fiasco of the overspend on the grants budget, and that pledge had to be cut back from 15,000 to an extra 10,000 places, despite the fact that the Government raided £100 million from the equivalent or lower qualifications budget, supposedly to fund new opportunities for first-time study. It is clear that thousands of young people will lose out on a university place this summer. Clearing, for many years a feature of university applications, will probably not occur this year. Will the Secretary of State give a commitment that the Government will fund those places for all the young people who achieve their entry standard offers?
	For those who have graduated, the only initiative that we have heard about from the Government was more than six months ago, on the interns programme. We had to wait until this week before we finally got the detail of how that will work. All it seems to amount to is that if a graduate has been unemployed for six months, they can continue to receive their jobseeker's allowance without any deduction, if they enter an internship scheme. That is a paltry response to a dire situation faced by some of the best educated people in our country.
	The Budget is a balance between fiscal stimulus and the rescue of the public finances, and the right hon. Member for North Tyneside (Mr. Byers), in a remarkably candid Blairite blast, rightly described the 50p tax rate as a political manoeuvre, a sentiment shared by the Liberal Democrats. As the Institute for Fiscal Studies said, the measure will achieve very little revenue raising to bridge the bulging gap in the public finances. It would be much better to return to a situation in which the taxes charged on income and on capital gains were aligned as they were in Nigel, now Lord, Lawson's 1988 Budget, and to close the loopholes that enable the very rich to escape such taxes. If we raised the threshold on income tax to at least £10,000, we could lift 4 million people out of taxation all together.
	The Budget's other fiscal stimulus was the VAT cut, which, in terms of debt repayment, will cost us all £12 billion. That money could have been much better spent now on capital projects to fund a green road to recovery. It could have funded local rail schemes, of which there are many around my constituency in Bristol, more home insulation and social housing. It could have ensured that the colleges and universities building programme was fully funded, and it could have given an immediate boost to the construction industry and to those who need their jobs to be secure.
	I hope that there will be many more green jobs in the future, but, if we are to achieve that target and our 2020 climate change targets, we will need many more young people who are technically skilled in science, technology, engineering and mathematics subjects, and who leave our universities with degrees in such subjects; otherwise, we simply will not be able to build the solar, wind and wave power projects that will deliver our 2020 targets. If Lord Mandelson really wants joined-up government, the Government must join up our energy targets with our educational failings, otherwise we simply will not succeed.
	We are in an emergency, but Budget measures and Government announcements do not offer any real help now. Graduates will have to wait six months before they can continue to receive their jobseeker's allowance while on an internship, and the young and unemployed will have to wait 12 months before they can get a training package—and it is not immediately clear what that will comprise. Capital expenditure is needed now, but the Government instead prefer to spend £12 billion on small-scale price reductions in our shops.
	In the long run, we need to re-think our business model. We need not only a green and sustainable future, but a more ethical dimension in business and a bigger presence for social enterprises. Those long-term changes to our business model are a subject for another day, but, today, Britain needs a Government who understand the current crisis and how to respond. Those who are currently in office have failed to understand the crisis and failed to apologise for their role in getting us into it, and the sooner they go the better.

Eric Illsley: I should like to comment on a few specific areas of the Budget. I do not intend to detain the House very long.
	In his opening remarks, the right hon. and learned Member for Rushcliffe (Mr. Clarke) made an interesting point about what I think he called a sea of debt, and about the origins of the financial crisis being partly in the sub-prime mortgage market in the USA and this country's mortgage problems. When he was challenged by Government Members about how far back the origins of the crisis go, he did not reflect on this country's obsession with home ownership, which started when his Government encouraged people to purchase council houses, and led to this country being far more concerned with home ownership than other countries that he mentioned, such as Germany, Japan and so on, where rental sectors still exist. Perhaps this country's obsession with home ownership and, to some extent, profiting from home ownership through buying and selling has led to that sea of debt and the encouragement of the ridiculous 125 per cent. mortgages to which he referred. In the weeks to come, perhaps we will debate that point further.
	My right hon. Friend the Chancellor of the Exchequer has had a difficult time in producing a Budget in the current financial climate, and the Budget deficit, being so high, has constricted him. It has also overshadowed some issues that we would normally debate after the Budget and during the Finance Bill—particularly excise duties and so on, which I hope to mention in a few moments.
	I have been concerned, particularly over the past few weeks, about the Building Colleges for the Future programme. It is well documented that my constituency has suffered greatly from the programme's funding squeeze and the Learning and Skills Council's obvious mismanagement. Barnsley college has a four-phase redevelopment programme: two phases are already complete, and the third is under way. The buildings have been demolished in anticipation of new build, but the funding has stopped, so, in the centre of Barnsley, we are looking at a big white fence surrounding a demolition site, and there is no guarantee that funding will be reinstated to complete the project. The fourth phase relates to sixth-form provision, which looks pretty uncertain unless funding is guaranteed. However, the phase is still at the planning stage, so, if it is considered as a newer application, there will be some considerable doubt about whether it will go ahead.
	I know that my right hon. Friend the Secretary of State for Innovation, Universities and Skills has written to Members, explaining that, following Andrew Foster's report, a committee will be put in place to decide which projects go ahead, but I urge Ministers to accelerate the decision-making process. I met the head of the learning and skills council for Yorkshire and Humber a few weeks ago, and he anticipated that, by the end of April, the decisions would have been made, yet, we are looking to May for the establishment of a committee to begin to consider which projects go forward.
	My right hon. Friend the Chancellor mentioned allowing companies leeway in paying their tax liabilities, and in difficult times many companies have benefited from being able to defer taxation payments. In my constituency, however, two companies, DTS Environmental and Martello Piling, paid their taxes, albeit, unfortunately, a few days late. DTS Environmental's tax instalments were paid a few days late on five occasions, and as a result it has lost its gross payment status, meaning that Revenue and Customs will deduct tax in advance. Before that, when it had gross payment status, it kept the money. The matter relates to other contractors, and to tax liabilities that are owed to HMRC.
	The condition of keeping gross payment status is, as I understand it, that payments are made on time, but, for the sake of a few days, this status has been lost and a huge financial burden has been imposed on companies in my constituency. They, unlike companies that are being helped, do not owe any taxation; their tax payments were all paid and up to date. Yet, they have been penalised to the point where HMRC commissioners pursued them to commissioners' hearings, which upheld the decisions. The Revenue gave the companies no leeway in relation to gross payment status. I hope to be able to pursue this through correspondence with Ministers over the next few days and weeks, because I am told that it has a substantial effect on the future progress of such companies.
	Another industry that will suffer as a consequence of the Budget—this was flagged up for many weeks by a great number of Members—is the pubs and clubs industry, with the increase in alcohol duty, which is now subject to a 2 per cent. escalator over and above the rate of inflation. Last year, duty on alcohol was increased by 9 per cent.; in November, it was increased by a further 8 per cent. in the light of the reduction in the VAT rate. Those substantial increases were imposed at a time when the economy was not in such a bad position as it is now; it was performing much better, as was the leisure industry. I understand perfectly well that the Government want to target the consumption of alcohol and eradicate irresponsible drinking, binge drinking, or whatever one wishes to call it, but ultimately the mature or responsible drinker is being attacked at the same time as the irresponsible drinker. Rural pubs and pubs on the edge of town centres are closing at the incredible rate of 40 a week.

Alex Salmond: It is a great pleasure to follow the hon. Member for Barnsley, Central (Mr. Illsley), my old friend from the Select Committee on energy all those years ago. It does not surprise me in the slightest, given his close connections with his constituency, that he knows more about the iniquities of bingo tax than Government Front Benchers did a few minutes ago.
	I have been in the House for 22 years, and I have seen many Budgets and many Chancellors. There have been good ones and bad ones, and they have happened at various times of the year—often, annoyingly, during the Cheltenham national hunt festival—but one thing is invariably true: all the Budgets that I can remember have had a good reception on the day and have then been gradually deconstructed, attacked and ripped to pieces over the succeeding days and weeks. This Budget was being deconstructed before the Chancellor sat down last Wednesday. Of course, he had little room for manoeuvre, but I suspect that he, and indeed the Prime Minister, would have hoped that a Budget strategically to address the questions facing this country in the greatest economic crisis in living memory might have lasted longer than the weekend before it was totally ripped to shreds and deconstructed, growth forecasts spending objectives and all.
	When I served on the Select Committee with my friend from across the Chamber, that was the last time that a Government were projecting real-terms cuts in public spending. There was an air of total unreality about the Secretary of State's introduction to the debate. I was trying to work out whether I had been reading a completely different Red Book as he outlined his vision of investment in public services with the new Labour party, as against cuts in public expenditure from the old Conservative party. The Red Book does not set out investment in public services—it sets out cuts that start next year and intensify, in an unprecedented way, through the forecast period that it lays out, climaxing in real-terms cuts in expenditure for each Department. The variable expenditure at the discretion of a Department of State, or a Government in Scotland or Wales, is undergoing real-terms cuts that, according to the Institute for Fiscal Studies, may reach 2 to 3 per cent. a year—greater than even at the high point of the Thatcher cuts of 1981-82. That is the reality of what is in the Red Book.
	I want to argue against the Budget and make an appeal for a change of course, a change of heart or a change of direction—any change to the short-term response to the economic situation we face and to the strategic choices that will have to be made about what matters as regards public spending. On the fiscal stimulus, I try to give the Government as much credit as I possibly can; after all, this is a Government who are living on credit, in every sense of the word. This year, between the pre-Budget report and the announcements in the Budget, there is a substantial fiscal stimulus of some £21 billion. It is not as massive as the fiscal stimulus in the United States of America—Obama's $787 billion—and nothing like the Chinese stimulus. China certainly has access to the necessary funds, while the United States has the convenience of a reserve currency and can therefore print money or sell bonds to finance its stimulus. None the less, a significant fiscal stimulus is taking place this year. We might quarrel about how it is being introduced, and I believe that it would have been far better to choose capital spending instead of a VAT cut, because that would have worked its way through the economy, created more jobs and left behind capital assets that the VAT cut will not, but there is undoubtedly a fiscal stimulus this year.
	However, the situation will change totally next year, because the balance of the measures in the pre-Budget report and the Budget is to have not a stimulus in the economy next year but a contraction of £4.675 million. We will have a reverse stimulus next year, and I cannot see for the life of me how it can be correct at this moment in our economic affairs to plan a cut next year instead of a continuing fiscal stimulus.
	The position will be affected by the so-called efficiency savings of £5 billion across the Departments, which will have a £497 million effect on the Scottish budget. According to the Scottish Government's input-output model, the impact will be the loss of 9,000 jobs, which will be hugely important and damaging in 2010. The various measures that we have been able to take in Scotland over the course of the current recession—the capital investment acceleration, the European budgets that we have also accelerated, the prioritisation of housing budgets—amount to the creation of about 20,000 jobs in Scotland. That is what we have been able to do by throwing every possible pound of expenditure at this recession. We have created 20,000 jobs, which is valuable. In a single afternoon last Wednesday, the Chancellor waved away 9,000 of those jobs with the projected cuts in public spending next year.
	Let no one be in any doubt that we are talking about cuts. We have an efficiency savings project in Scotland, and those savings are reinvested in the Department or the local authority that makes them. That is the very process, incidentally, to which the Secretary of State for Innovation, Universities and Skills applied such approval when he talked about the science budget. However, these planned cuts are not efficiency savings, they are top-slicing from departmental or governmental budgets in Scotland, Wales and Northern Ireland.
	As well as the impact of the cuts that are being projected for next year, I resent the way in which they are being described. The Chancellor said on Wednesday:
	"Some have argued that we should cut public services immediately, rather than invest and grow our way out of the recession...that would be the wrong thing to do."—[ Official Report, 22 April 2009; Vol. 491, c. 245.]
	But that is precisely what the Chancellor is doing from 2010 onwards. That would be bad enough if we were confidently expecting an economic recovery from 2010.

Alex Salmond: I am grateful to the chairman, because he helpfully outlines the very basis of my speech. I am outlining the economic argument and the timing. The Chancellor forecasts 1.25 per cent. growth next year, although many independent forecasters are forecasting much more pessimistically. Even if there were 1.25 per cent. growth, it would be a faltering recovery next year and it would not be the time to undergo even the cuts envisaged in the Chancellor's heroic forecast. The right hon. Gentleman's second point is about exactly the subject of the second part of my speech, which is the long-term choices that will have to be made about the public spending profile.
	As I said a few minutes ago, the Institute for Fiscal Studies, looking at the Red Book, forecasts that the discretionary elements of public spending will decline by 2 per cent. or more in real terms. There will real-terms cuts in discretionary spending the like of which we have not seen, except in one year during the period of high or low Thatcherism, depending on our point of view. Make no mistake; those cuts will have a direct impact on key public services. I have here the projection of the £5 billion of efficiency savings for next year. In the case of the UK Departments, £3 billion of those savings will have an impact on either health or education, so those are the budgets that we are talking about. Hopefully we will not face a developing flu pandemic, as is currently feared, but even if we avoid that fate, there is an indication that health expenditure will come under serious pressure as we meet this or any other emergency that develops. Health and education budgets are the very last things that we want to be subjected to such pressure.
	What other budgets would give us the public spending savings that are undoubtedly required? When the right hon. Member for North Tyneside (Mr. Byers) was climaxing his speech, he was about to make another attack on Government policy. I hope that I am not wrong in anticipating what it might have been. I was very interested to see him quoted this week in  The Observer, which stated that he
	"has long supported both identity cards and the nuclear deterrent but said he could not justify to vulnerable constituents the respective £5 billion and £70 billion bills when basic public services were threatened by the economic crisis."
	He was not content with the one attack on the Budget that he was able to make in his speech, and I applaud the other one he was about to make before he was so rudely interrupted by the chairman of Celtic.

Parmjit Dhanda: I think that  Hansard will state otherwise, but we will leave that to the record.
	The right hon. and learned Gentleman made other interesting comments. When challenged, he talked about his position on VAT. He said that, when he was on television or when he was quizzed, he always made it clear that he supported the reduction in VAT only with caveats. I can recall seeing him on television, supporting the VAT cut without caveats. Perhaps I am wrong—it is up to the commentators to decide. I dare say that Andrew Neil and many others around the world will look at their tapes, and I will let them be the judges.
	The right hon. and learned Gentleman also mentioned the under-25s and expressed, rightly, fairly and understandably, his concern about the number of young people who currently face unemployment. I share that concern and one of the best aspects of the Budget is the measures to tackle unemployment for young people. We in the Labour party must not forget the measures in the past 12 years, which have made a huge difference—in my community in Gloucester, youth unemployment decreased by 75 per cent.
	I also welcome additional support for those in danger of losing their homes, and there were other measures, which we now perhaps take for granted on Budget days: the increases in pension credit and in tax credits as well as widening the threshold for pension credit. Those are all welcome.
	There are some things that I would have liked the Budget to contain, but it did not, and I will discuss them in the next few minutes. The Chancellor was right to talk about efficiencies and the need for them. I would have liked to hear more. I would have liked him to be more specific because I thought that it was a golden opportunity. Whether Departments take a closer look at what the efficiencies could be made and report back in the coming weeks or whether measures are announced in the Queen's Speech, I hope that those on the Treasury Bench will consider some of the thoughts that I will outline.
	After discussions with the Library, especially about local government, I was interested to realise how many two-tier authorities still exist in this country. I have always championed unitary local government. The Budget at this time afforded a great opportunity for the Chancellor or Departments to say that they would press ahead with that. Why should they do it? Is it worth doing? According to the Library, there are 24 two-tier local authorities in this country. The savings from authorities moving from two tier to unitary are between £15 million and £20 million a year. If the other 24 authorities, including mine in Gloucestershire, became unitary, the savings would be around £500 million a year, every year —£1,500 million in a comprehensive spending review period.

Parmjit Dhanda: Everything is predicted when it has not actually happened, but it is common sense to politicians and, more important, to the people we serve. The system is simpler.
	I recall that, when I was a Minister, I responded to debates, in which Members—I will not name them, but hon. Members can find them if they go through  Hansard—talked about changes and said, "Oh my goodness, if I lose my district authority, I cannot lobby it on this issue", when the county rather than the district authority was responsible for the matter. Two-tier authorities cause genuine confusion, among not only our constituents, but many politicians.
	Again, I can give an example from my time in office. I saw some of the great work that happens in the fire and rescue service. In places such as Lincoln and the south-west and in many areas, more and more co-responding is happening, whereby retained firefighters, especially in rural areas, do a terrific job in ensuring that they are first on the scene of an accident. They have saved countless thousands of lives, including in Leicestershire, in recent years. However, the system has not been rolled out effectively throughout the country. I would like a much stronger protocol between the Department of Health and the Department for Communities and Local Government to roll out co-responding.
	Let me give a specific example. My wife was with our two-year-old at Hucclecote library near my home, where, on a Tuesday morning, there are nursery rhymes for the kids. One Tuesday, a whole group of young mums and their children were there. One of the mums felt faint and collapsed. The child, understandably concerned for its mother, was beside itself. The group of mums looked after the child and called 999. It took some time—I think in the order of 20 minutes—for an ambulance to arrive, but there is a fire station just round the corner and they are all fitted with defibrillators these days.
	We need closer working between the Department of Health and fire and rescue services to make use of the fact that—again, according to the House Library—the ratio of fire service staff to ambulance workers is some three or four to one, with 42,324 full-time equivalent firefighters in this country and some 17,000 ambulance workers. If we cannot get the two Departments to agree a good protocol on that, it would make sense to move fire and rescue services to a different Department. If we moved the fire service to the Department of Health, we could bet that the linkages the fire and ambulance services would work much better. We would save far more lives, as well as saving a lot of money. We can reform our public services, making them better and saving money and lives as well.
	Finally, a couple of weeks ago I wrote a piece for ePolitix in the run-up to the Budget. I was asked what I would like to see in the Budget. A range of MPs will have put forward their ideas, but one thing that comes up in my surgeries quite a lot is this. I have constituents who are frustrated because their parents are going into care, but the care system is very expensive and their savings are drawn down, which means as a consequence that what will be handed on to the next generation is reduced. The care system is becoming more expensive as our demographics change. In 30 years, we are likely to have four retired people to every working person in this country.
	I would like the Government to consider—and, come the Queen's Speech, even introduce—a Bill that allows for tax relief or grants for those who would like to create granny annexes in their homes to look after elderly relatives. Not only would that make a difference through savings for the Government, which it undoubtedly would, but it would help to create a more caring society.

Desmond Swayne: They were the result of it—the stagflation and everything that went with it, although however much I might disagree with the hon. Gentleman, it is a privilege to follow him in the debate, because he is assiduous in this Chamber, courageously doing his duty to hold the Executive to account. For that, we should all be grateful.
	I hope that, at some stage during the debate on the Budget resolutions, we will get a full exposition of the Government's growth forecasts and how they were arrived at. Perhaps the Minister plans to give us that exposition when making the winding-up speech from the Treasury Bench. It is important that we get it, because, to be charitable, those forecasts have proved controversial. However much the hon. Member for Luton, North might disparage the International Monetary Fund's forecasting, it was noticeable that, within minutes of the Chancellor sitting down last Wednesday, the IMF came up with a very different set of forecasts. That is important because this is the post-dated Budget.
	All the important decisions on what is to happen are not in the next financial year. How we are to deal with the enormous, crushing deficits is not to be decided in the next financial year. That has all been put off for future years and decisions. Therefore, the forecasts become ever more important than they were in the past. That is why it is important that those on the Treasury Bench should give an account of those forecasts.
	The way in which this debate began was, of course, ridiculous—with the Secretary of State for Innovation, Universities and Skills announcing that it is about what the Opposition propose, rather than the Government's Budget resolutions. The reality is exactly as I said: this is the post-dated Budget, the do-nothing Budget, the Budget that will not tackle the elephant in the room—the huge deficit. It is extraordinary that the Government had so little to say about their forecasts and the deficits that will build up. It is extraordinarily important that those should be dealt with. I would of course prefer that those deficits were dealt with in the next financial period. Let us take it on the chin now, rather than have the economy flinching, knowing that the blow is to come, as that will be so damaging for confidence in the future and, in particular, as we attempt to recover.
	I want to say a few words about the New Forest. We had high expectations of what might have come out of the Budget because we had been hit so hard by the recession. In fact, the growth in unemployment in my constituency has been higher than almost anywhere else in the country since the end of last summer. I put that down largely to the fact that so many people have commuted to financial services industries in and around Bournemouth and Southampton and that we have headquartered a disproportionate number of construction companies. Principally, however, I put it down to the enormous number of small businesses in the industrial estates around the market towns. They have been very hard hit by the credit crunch.
	The world that the Secretary of State described of the real help that is being provided now to small business and getting credit flowing again does not bear any relationship to the reality faced by small businesses in my constituency. I am approached every Friday at my surgeries by small businesses that have viable order books; they are good businesses, but are experiencing enormous cash-flow problems. Their difficulty is that they are still being serviced by zombie banks, which are still withdrawing credit or providing it only on impossible terms.

Desmond Swayne: I agree that those are important avenues, but I still support the initial banking rescue and the second banking rescue. They were both necessary, but far from sufficient. The problem is this: were I a prudent and risk-averse banker—I wish we had had more of those over the past 10 years—I would be arguing against making loans to the very small businesses for which I am demanding action now. That is the irony. The banks' balance sheets are stuffed with an enormous amount of high-risk assets—toxic assets, if you like, Mr. Deputy Speaker. The last thing that a prudent banker should do is to start taking on more high-risk lending—and let us face it, lending to small business in a recession is relatively high risk. Given the state of their balance sheets, banks should be averse to taking on more of those assets and to making more of those loans to small businesses.
	The Government's second banking rescue attempted to deal with the problem of toxic assets by saying, "Right, we're providing a guarantee—a form of insurance." That was necessary, but it was not enough, because that guarantee does not cut in until the banks lose virtually all their capital base. The prudent banker will still hoard his cash and try to rebuild his balance sheet rather than make loans to the small businesses in my constituency that desperately need it. If we are to deal with that problem, and to stop the banks being zombie banks and get them lending again, we have to deal with the new loans that we are encouraging them to take on. We have to provide the guarantee and the insurance to that new business rather than dust the old toxic business that already pollutes their balance sheet. That is why we have been asking since well before Christmas for a much more ambitious loan guarantee scheme. All the schemes that the Government have announced have not delivered a single loan to constituents in the New Forest. That is the difficulty that we face: credit is not flowing, and it has to if we are to recover from this recession.
	I want to conclude by saying a bit about the Government's monetary policy. I would have thought that the Budget statement and debate ought to have at least focused on elements of that. I support, by and large, the main plank of monetary policy, which is a significant reduction in interest rates, however painful that may have been to a very high proportion of savers in my constituency—hon. Members should bear in mind that I have, I think, the second-highest age profile of any parliamentary division. Those people have saved all their lives and done the right thing, but they are now suffering very much in order to see interest rates reduced for people who often enough have not done the right thing. The Budget should have been much more generous to those savers to compensate them in other ways for the important policy of reducing interest rates.
	However, it is the other aspect of monetary policy, which is scarcely mentioned, that concerns me more—the whole business of quantitative easing. I would have thought that the Chancellor would have given us an exposition of precisely where we are with this key departure from conventional monetary policy. It is extraordinary that the Bank of England has created bank deposits to a significant proportion of our national income—printing money, as the euphemism goes. We have not had a vote on that. We have not had a statement on it. We have not even debated it. It is extraordinary in a free Parliament that is supposed to have its finger on the pulse of Government policy that that has gone so unmentioned.
	I am not saying that I am against the policy. I know that economists such as Tim Congdon believe that it is right, but there is a series of questions that we ought properly to have scrutinised—how much, when, when do we stop, and where are we in the cycle? All those issues have never been discussed or scrutinised. I begin to wonder whether that might after all provide some part of the explanation for the extraordinary growth statistics that were brought before us last Wednesday, with the so-called trampoline bounce. Could it possibly be an inflationary bounce? Could it possibly be a bounce that will destroy the savings of those who still have some left?

Emily Thornberry: This Budget has been given at a time of unprecedented turmoil in the economy and of great uncertainty about the future. The figures that we learned about last week on levels of Government borrowing remind us of the seriousness of the economic situation. The road ahead of us will be much tougher than the road behind us, but even if spending slows in the immediate future, the huge investment in public services over the past decade will provide a lasting legacy for our country.
	Thanks to that investment, my constituents are benefiting from a new hospital at University College hospital, £1 billion to rebuild Barts hospital and new investment in the Whittington hospital. All Islington's secondary schools are substantially or entirely being rebuilt, youngsters are benefiting from substantial investment in the buildings that contain our primary schools, and we have many new children's centres. That, of course, is not to mention the £157 million that has gone into bringing social housing in my constituency up to decent homes standards. Those are the many dilapidated roofs that we fixed and new roofs that we built while the sun was shining. Now we are faced with a challenge on a very great scale, and I believe that any Government would be failing in their duty if they did not act boldly and bravely at such a time. In their response to such hard times, politicians can now show what their true priorities are and where they lie.
	When I left university in the early 1980s—

Graham Stuart: That is exactly what is happening now. At the end of 12 years of this Labour Government, more 16, 17 and 18-year-olds are not in education, employment or training than when the Government came into power. More people under 25 are unemployed. A whole generation is at risk of the very thing that the hon. Lady is talking about. She should face up to that reality.

Emily Thornberry: No, I will not give way again.
	The fear among environmentalists has been that our short-term energy needs may lead to a massive carbon footstep backwards. I therefore welcome announcements made in the Budget that no new coal-fired power stations will be given permission unless and until they show that they include carbon capture and storage facilities on that plant. Although of necessity such facilities will be small scale to start with, as the technology develops, coal power stations will be expected to extend CCS to the whole plant. Environmentalists such as me have been seeking such assurances and I am grateful to the Secretary of State for his assistance and commitment to that issue.
	The Budget introduces many other welcome moves towards a low-carbon future: the increase in landfill tax, our continued commitment to the fuel duty escalator, the sustained momentum on vehicle excise duty, the money available for better energy efficiency for small business, public buildings and homes, and the increased investment in renewable energy generation, particularly from offshore wind. I am pleased that the Budget marks the world's first legally binding carbon budget.
	The increased funds available for housing are also welcome, but I urge the powers that be to ensure that that money goes to areas of greatest need such as Islington, where 13,000 families are languishing on the waiting list for social housing. I give hon. Members an example of a particular development. On the Holloway road in my constituency, there is a development above the Tesco's with 60 units, only 10 of which are affordable units. Exactly why the Lib-Dem council thought it was appropriate to allow only 10 out of the 60 to be affordable is another debate for another time. Lo and behold, 50 of those units remain empty. It seems to me that that sort of development is a great candidate for public ownership to allow families to have somewhere to live.
	I urge the powers that be to build large units, because for every five-bedroom flat that they build, they will be able to move an overcrowded family from a four-bedroom flat into that five-bedroom flat, and then a family in a three-bedroom flat into the four-bedroom flat, and a family in a two-bedroom flat into the three-bedroom flat. That is just from building one five-bedroom flat. We need to look carefully at what we are building.
	I welcome the Government's long-standing commitment to ending child poverty and it is a shame that they have been unable to devote more resources to measures that would make a big difference. It is unfortunate that we have not been able to consider the possibility of introducing London weighting for tax credits and benefits.
	I appreciate that there is not much money around, but I believe that there is one pot of money that I urge the Government to use to fund their priorities. I believe that £76 billion, which we could use to end child poverty, is being wasted on building, renewing and maintaining Trident. I appreciate that I am in somewhat unusual company in this. It seems that my right hon. Friend the Member for North Tyneside (Mr. Byers) and the right hon. Member for Banff and Buchan (Mr. Salmond) agree with me on the matter, but that does not necessarily make it wrong—it makes it right. At a time such as this, we need to reorder our priorities. It seems to me that at a time such as this all our constituents would appreciate it if we no longer wasted our money on something like Trident.
	As we know, many banks are trading today only as a result of money paid into them by the taxpayer. Many members of the public have been completely and understandably outraged at the perception that public money is paying the bonuses of those who have failed. Although we appreciate that legal and contractual difficulties have resulted in our not being able to stop them claiming that money, I was hoping that the Budget would provide an opportunity to claw back those unearned bonuses. I was hoping that we would be able to find a way to tax payments over and above the basic salary paid to the bankers at 100 per cent.
	I appreciate that as a Back Bencher I am free to make such suggestions. It is not for me to develop the necessary mechanisms to put those ideas into action. However, although it may be difficult, if anyone can, Alistair can. I ask him to look at that matter again. I welcome his bold move in introducing a 50 per cent. tax rate for the top 1 per cent. of earners. I believe that that is fair and right. It is not a tax for tax's sake—the same old scare story that Tories and Liberals like to bandy around. That tax rate has been brought in because we need money to get this country through the downturn. I believe that it is right for that money to come from those who are now in a position to be able to pay—those who have benefited most from the good times of the past 10 years.
	I recently surveyed my constituents through my annual report, and 80 per cent. of respondents agreed that a higher rate of tax on those earning more than £150,000 was justified.  [Interruption.] I suggest that Opposition Members listen to this. The higher contribution from those on higher incomes is a policy that only Labour supports—the Liberals have abandoned it and the Conservatives have an obvious distaste for it. However, it is popular among our constituents because they know that it is fair.
	More generally, the Conservatives' response to the economic downturn has revealed what really makes their hearts beat faster. Despite the rhetoric of the past few years, the current crisis has unmasked the Thatcherite zeal of so many in the Conservative party, including David Cameron. The Tories are inherently queasy about spending, and they are suckers for cuts. We saw them go to their weekend conference with a real spring in their step. They think that they do not have to bother with compassionate conservatism any more and that they can go back to small government. At the weekend, David Cameron said:
	"with a Conservative Government, if ministers want to impress the boss, they'll have to make their budgets smaller, not bigger."
	He said that the Government should have reduced spending in 2008 and should now reduce planned spending in 2010. No one denies that repaying the borrowing will mean tough decisions, but it is inconceivable that a Labour leader would ever wear the badge of service cuts with such pride as David Cameron clearly wishes to wear it. We will protect—

Ben Wallace: Someone who thinks that France is doing very well because of its relatively high tax burden, despite having 12 per cent. unemployment, could make that argument, but I do not agree with it. I think that the UK has become wealthier because it has embraced enterprise and encouraged people to come here to create wealth and exploit innovation and technologies. That was actually what new Labour recognised all those years ago, but now seems to have abandoned. I understand that people work in the private sector and contribute to creating that wealth, but innovators need to be rewarded and incentivised. I do not think that I will ever earn £150,000, but that does not upset me or motivate me to go out to stop other people making that sum. I hope that if I can encourage people to be rewarded for their innovation, that will create wealth for this country and contribute to the coffers that pay for the vast public services that we all enjoy—I support public services and I do not want them to be reduced or cut.
	Nothing in this Budget reversed the effect of some of the anti-saving mechanisms introduced during this Government's past 10 to 12 years: the taxes on pensions and the clear signals from the Prime Minister that borrowing was far more important than saving; time and again, the mantra used to be about, "The lowest mortgage rates since the war." That came out of the then Chancellor's mouth every time, and it was really telling people that they ought to be borrowing, not saving. We could pave the way to ensure that one of the ways out of this mess is to instigate saving again as the first rule of good fiscal policy, not the last.
	I wish to deal with the thrust of my argument, which is about research and technology. My working background was in Britain's biggest research and technology organisation, QinetiQ, as it was known then. I also have the privilege of representing Lancaster university, which recently featured as having the United Kingdom's top physics department for research. Importantly, it will be our research, both pure and applied, that will get us out of this mess, and it will be the exploitation of intellectual property, especially in the sectors where Britain leads the world, that will help us to catch up in respect of the competitive impediments that we face.
	I look with interest at the strategic investment fund of some £750 million that has been announced, £250 million of which will focus on low-carbon work—that is fine because that is in line with a Government policy; it is also a policy of ours to encourage alternative energy supply. Some £50 million will go to the Technology Strategy Board, the work of which I examined today and found that although it carries out a number of measures, I remain unsure whether or not such a body is needed to deliver such things; it has the right impetus, but it does not have nearly enough money as it should have.
	I cannot quite account for where £450 million of the money is going—the Budget contains no detail about this, and I hope that the Minister who sums up offers a breakdown of that figure. Some £10 million is to go to UK Trade and Investment to promote British technology abroad, and that is welcome. When I used to deal with UKTI or the DTI—deter trade international—as it was then, it put so many bureaucratic barriers in our way when we tried to do business overseas that it was simply often not worth doing business with it.
	We have missed the opportunity to strengthen or broaden the research and development tax credits measure, which was a good measure introduced by the Prime Minister when he was the Chancellor, and it is something for us to build on. In the Budget we should also have examined regional development agency reforms, as huge budgets are involved and they should be used to assist with pure and applied research. Amazingly, in my constituency, the physics department at Lancaster university is developing research that will help Britain in the short, medium and long-term, and when it faces pure education funding cuts, we should look to the RDAs to support that work, because it keeps scientists and top innovators in the country. It is a missed opportunity if we keep the work of the RDAs too far apart from that of some of our higher education institutions.
	Amazingly, the most successful sector in which we exploit and develop intellectual property and research has not been mentioned—the aerospace industry. It exports roughly £20 billion of exports, employs 170,000 people up and down this country, is a world leader in many sectors, such as those associated with materials, applied technologies and engines—one thinks of companies such as Rolls-Royce—and it employs 2 per cent. of all the UK's apprentices. The reason why it is not mentioned is that within the Ministry of Defence budget, defence research and development has been cut this year alone by 7 per cent. The Government have cut funding in the most successful sector in terms of our job and wealth creation—in those high end competitive technologies—by 7 per cent.
	That is not the only contradiction in the Government's small ambitions for job creation, because it abolished the Defence Export Services Organisation last year, which helped export the great inventions and technologies that defence put together. The aerospace industry helps to support the north-west and Lancashire as one of the biggest job providers in the region and in my county. It could be argued that abolishing DESO last year will provide more money for UKTI this year, but it has not made much difference. A bit of money has been moved from one place to another, but DESO was very successful.
	Table 6.1 of the Red Book shows the efficiency savings made in all the Departments, and almost all have made cuts in sectors that are key to employment generation and the creation of a competitive economy. For example, the British Council has been cut by £18 million, but it is a long-term generator of customers and partners for the UK. If we prevent people from learning English in other countries or stop promoting cultural exchanges, they will not come and do business with Britain. They will go elsewhere.
	The Department for Innovation, Universities and Skills has cuts of £118 million and £106 million linked to the research councils. The jargon that accompanies the table is waffley in the extreme, promising to save
	"£118 million through increasing the effectiveness of research activities funded by the Research Councils by reducing administration costs and refocusing spend on new research priorities".
	Any hon. Member with a university in his or her constituency will know that we have already had one of those rounds. We have already seen organisations such as Jodrell Bank face cuts.
	The Department for Business, Enterprise and Regulatory Reform promises
	"£1.4 million savings from the Competition Commission Council's fundamental review of the Competition Commission including through reducing burdens on business."
	So the Government will cut the study that may help to reduce red tape on business and that would help business get us out of this mess. The Department for Environment, Food and Rural Affairs promises to save £44 million by putting the cost of animal disease monitoring and compensation on to farmers and rural businesses—and we should not forget that it was a Government lab that spread foot and mouth last year. That will not help our farmers in this economy.
	To see the seeds of recovery, we have to sow the seeds of recovery. That means focusing on productivity, red tape and over-burdening employment legislation. The Government have avoided doing that in the Budget. Instead they have sown the seeds of uncertainty by pushing aside all the real economic truths, so that a certain new Government will have to pick up the pieces in 12 months' time.

Tony Baldry: It is no good the hon. Lady jumping up and down. The only thing that she learnt at the Bar was how to make a decent plea in mitigation. That is all that we heard from her earlier.
	Last November, the Chancellor of the Exchequer said that the Government would need to borrow £118 billion next year. In last week's Budget he upped the amount to £175 billion. The increase of £57 billion is bigger than any of the Labour Government's previous Budget deficits. Borrowing that amount in the current financial year will be the highest level of borrowing since the second world war. Experts think that even those desperate figures are too optimistic. Hardly had the Chancellor sat down than the IMF contradicted his forecasts. It said that the British economy would contract by 0.4 per cent. next year as opposed to the Chancellor's prediction of growth of 1.25 per cent.—itself a desperate figure in any other circumstances.
	After the Budget, everyone has to accept that, as a consequence of this Government's mismanagement of the economy, national debt will climb to about 80 per cent. of national income. Let us be clear that that indebtedness is the result of decisions made by this Government. They entered the recession, as the Governor of the Bank of England has said, borrowing too much and with little room for manoeuvre.
	The overwhelming reality that everyone now must recognise is the complete mess into which the public finances have descended. The challenge now is how to control state spending before it destroys national solvency. There is no way in which the Government can any longer pretend to spend and borrow their way out of the hole they have created. There is no more money to spend. As for borrowing, the figures are nightmarish. This year, the Government were already planning to sell a record £220 billion of bonds—gilts—followed by more than £240 billion in 2010-11 and £250 billion in 2011-12. In all, over five years they plan to sell some £900 billion of gilts, or twice the size of the entire UK Government bond market. What happens if overseas investors decide not to buy UK gilts? They are under no obligation to hold gilts and they have no reservations about selling them, especially as there will be competition from other countries wishing to attract lenders. What will happen if overseas investors seek higher yields elsewhere?
	The reality is that before us lie at least two Parliaments of pain as we repair the damage caused by this Government's financial mismanagement and the resulting £90 billion a year black hole in the nation's coffers. The Institute for Fiscal Studies has estimated that it will take more than 22 years for the national debt to drop back to 40 per cent. from the nearly 80 per cent. that the Chancellor forecasts. Hamish McRae said in  The Independent last Thursday:
	"We have both a fiscal catastrophe and wild swings from boom to bust. You can blame this government in general and Gordon Brown in particular for that failure".
	This Budget was also fundamentally dishonest on a number of counts. First, the Chancellor sought to give the impression that a black hole in the public finances could be sorted out by increasing the higher tax rates. Even if the 50 per cent. rate of tax were to bring in the Treasury's most optimistic yield, it would bring in only about £7 billion. To put that into context, the Government are planning to spend up to £4 billion on recruiting management consultants for the public sector over the next four years. So, £7 billion will not necessarily go a very long way and it is also a long way off meeting the £175 billion needed. Last week the Institute for Fiscal Studies also noted that raising the higher rate of tax, even to the 45p in the pound that was first thought of, might lose the Treasury money as it moves the wrong side of what economists call the Laffer curve after the economist who pointed out the tendency of punitive taxation to yield diminishing returns.
	It will, of course, be a footnote to the 2009 Budget that it marked the death of new Labour when the Chancellor said the words,
	"the new rate will be 50 per cent."—[ Official Report, 22 April 2009; Vol. 491, c. 244.]
	Was it not the present Prime Minister who, when he was Chancellor of the Exchequer, said on the "Today" programme in January 1997 that
	"we will leave the basic rate of tax unchanged and we will leave the top rate of tax unchanged"?
	That pledge was explicitly repeated in the 2001 and 2005 general elections—a tax promise that we were told reflected the spirit of new Labour and a commitment not to punish success. I suspect that the speech that we heard earlier this afternoon from the right hon. Member for North Tyneside (Mr. Byers), a former Labour Secretary of State for Trade and Industry, which condemned the 50 per cent. tax rate, will be well worth reading and re-reading.
	It is dishonest of the Government to try to pretend that higher taxes can meet the need to sort out public finances. No Government for 30 years has sustained tax receipts above 37 per cent. of GDP, yet the Government are proposing that spending should rise to 48 per cent. of GDP, almost as high as in the mid-1970s, when the IMF came in.
	The Budget was also dishonest in its basic assumptions about the economy's likely performance. That point was tellingly made on Friday when official figures showed that in the first three months of this year the British economy contracted at the fastest pace for 30 years, with a slump in manufacturing that was the worst since records began 61 years ago.
	To my mind, the greatest dishonesty of the Budget was that it deliberately postponed until after the next general election any difficult decisions about public spending and controlling public spending. From 2011, public spending will grow in real terms by just 0.7 per cent. a year. Even in the tightest years of Margaret Thatcher's first Government, public spending increased by more than 2 per cent. in real terms. When I raised those points with the Secretary of State earlier in the debate, he accused me of raising a distraction. I shall say it again: the Government propose, after the next general election, a tighter level of public spending than we ever saw under Margaret Thatcher. However, we have not had a scintilla of a suggestion from any Minister about where they expect to make savings.
	Disingenuously, Lord Mandelson toured the radio stations on Friday, challenging us to say how we would reduce spending. That was disingenuous because his words sought to give the impression that a Labour Government could and would maintain high public spending while the figures are there for everyone to see in the Budget. From 2011, public spending will grow at just 0.7 per cent. a year, which will inevitably result in some serious re-approaches to public spending. The country deserves better than a year of pre-election name-calling and a year of the Government of the living dead. We must all sort out sensible processes to engage everyone in an honest debate about how we can restructure the state. We need an honest acknowledgement that together we need to get a grip on Government spending and public spending and we need to decide how we can best achieve that. The Government will not even tell us how the vast amount of borrowing will be repaid. By next year, the Treasury expects Government debt interest payments alone to equal spending on education and defence combined.
	At present, many of my constituents are understandably concerned about the taxes on the many that this Budget introduced: the increase in fuel duty, the reintroduction of the fuel duty escalator and the increased tax on beer. Those were all unwelcome, regressive moves. The ongoing challenge of this Budget—the reality to which every right hon. and hon. Member in this House has to face up—is the question of how we most effectively reduce public spending while, at the same time, maintaining decent public services. We need a grown-up and honest debate that engages everyone from now onwards.
	We cannot simply spend the coming year between now and the general election catcalling at each other. This issue is far too serious. If we are to maintain decent public services and get our public finances in order, that will require sensible, proper, grown-up and mature debates. I think that the country expects no less of us all.

Rob Marris: I think that we are inching our way there as a House. We are at a big fork in the road, and the details are important. Following on from the closing remarks of the hon. Member for Banbury (Tony Baldry), and the speeches that I heard in the Chamber on Wednesday by my right hon. Friend the Member for Birkenhead (Mr. Field), and the hon. Member for Esher and Walton (Mr. Taylor), we need to look at the big picture.
	As I say, our society is at a big fork in the road. That was hinted at somewhat in the exchanges between the Conservative and Government Front Benchers today, but neither of them went far enough. My right hon. Friend the Secretary of State for Innovation, Universities and Skills opened the debate with a solid speech backing up the Budget and the reasons for it. The right hon. and learned Member for Rushcliffe (Mr. Clarke), speaking for the official Opposition, gave a slapdash but polished performance in his usual way. His speech was witty and good, but it did not even tackle what I think is the big picture.
	We all know, as constituency MPs, that when our constituents approach us requesting that the Government do something, whether at national, regional or local level, it is almost invariably—but not always—to do with spending money. There are those who come to us and say, "Don't spend our money on identity cards" or "Don't spend our money on Trident." That would save money, but that is not what motivates them to come to us. In my experience, and from talking to hon. Members over the years, I know that that is what constituents say. They state, "The Government ought to be doing this", and the "this" to which they refer costs a lot of money.
	Both today and earlier in the debate on the Budget, Conservative Back Benchers have quite properly raised their concerns about social issues, child poverty and so on, and have decried the Government for not having had more success on those issues. They have implied, and sometimes explicitly said, that they want a Government to spend more money on those sorts of things. However, as human beings, residents of the United Kingdom and politicians, we all know that resources are finite. That is why we are at a big fork in the road.
	People in this country and around the western world face a growing debate on the size of the state. Should the state consume 30, 40 or 50 per cent. of resources, or more, as happens in some countries? Should the state be shrinking or growing? Those are the kind of big-picture public debates that we do not often have in this House. Nor do we often have the sort of debate that I mean—I am not an academic—in our society. People do not ask, "How big should the state be? How big are we comfortable with it being? If it is bigger, what do we get in return for a bigger stake? Is that what we want?" We do not have enough of those debates. Such debates may sound overly academic and philosophical, but they are intensely important to the future of our society and the future of our economy.

Rob Marris: He can see on my notes, which he says he was not looking at, that PFI and quangos are the next part of my speech.
	I return to wealth creation for a moment. Wealth creation is sometimes posited by conservative—and Conservative—commentators as stemming from the private sector and not from the public sector. There is a myth that the private sector creates wealth and the public sector spends it. The hon. Member for Lancaster and Wyre (Mr. Wallace) seemed to be intimating that. He then rushed on to extol the virtues of the university in his constituency, what it was doing for research and what that would do for wealth creation. I may be wrong—perhaps there is a private university in his constituency, but the university of Lancaster is a public institution.
	An accountant came to see me in my constituency a while ago, pushing the same nonsense line. I asked, "Are your staff literate?" "Of course," he said. I said, "Who do you think taught them to be literate? Did they all go to private schools?" "Oh no, they didn't," he replied. I asked, "Do they ever get sick?" "Yes, they do," he said. "Well," I asked, "do they get treated by private medicine or the NHS?" "The NHS," he said. So I said, "Don't tell me it is only the private sector that creates wealth."
	Of course the private sector is a major driver of and contributor to wealth creation for this country and should be fostered for that, but when we are having a discussion on the size and role of the state, we should remember that the state itself, through the public services that it provides, has a role in wealth creation. One of the big factors that is tipping General Motors and Chrysler over the edge—it has not yet tipped, and we hope will not tip, Ford Motor Company over the edge—is the huge amount that they have to pay out for health insurance. Ironically, the big corporations in the United States of America now say to the Federal Government under President Obama, "Bring in some kind of national health service; we can't afford to pay all this stuff." The NHS in the United Kingdom has a role to play in wealth creation, and we should never overlook that when we discuss the role and size of the state.
	There are problems with the role of the state, as my hon. Friend says. I have always been very dubious about the private finance initiative, and I must say to my right hon. Friend the Financial Secretary to the Treasury that I am surprised that we are continuing with it and, in fact, bunging it £2 billion to dig it out of a hole. It seems to me to be a contradiction in terms. Under this Government, sadly, quangos have proliferated, so I am glad that the Learning and Skills Council, which my hon. Friend the Member for North-West Leicestershire (David Taylor) mentioned, will be abolished. I have been pressing for that for several years.
	The state has a fantastic role to play, but there is a price. If, unfortunately, there is to be a change of Government, the figures for Government borrowing in the ensuing years will still be very similar. This year, there is a debt of £175 billion, or 12.4 per cent. of GDP; next year, it shrinks to £173 billion, or 11.9 per cent. of GDP; then to £140 billion in 2011-12, or 9.9 per cent.; and, in five years' time, we reach a £97 billion deficit. Those are huge figures and, when we talk about such big figures, we as politicians and as citizens must ask: what are we getting for it, are we getting what we want, how big a stake do we want and what do we want the state to do?
	Some of that debt is inherently supportable by me and, I suspect, many of my constituents when it is invested in bricks and mortar. The majority of my constituents who buy a house, like the majority of people throughout the country, do so on a mortgage; they borrow money to invest in bricks and mortar and, 25 years later, when they have paid it off, they have something to show for their money.
	We will also be borrowing money to pay benefits, however, and I support that. I do not want it to be a long-term thing, but I do not want people starving in the street or in poverty. We are borrowing money for education, and the state has a huge role to play in education. The state should provide free education in school; subsidise universities—as it does to the tune of about £10 billion—and further education colleges; and provide the national health service. When economic times are tough, that requires borrowing money to keep people alive—literally, in the case of the NHS. There should be a big public debate.
	There is another big public debate that we have not had, or have had only tangentially, about the role of taxation in social change. I hear the figures bandied about—about how the 50 per cent. tax rate will drive people out the country, about the Laffer curve and about how the tax take will go down. Of course, one has to be aware of that issue, but there is also a basic issue of equality. Professional footballers in this country earn in two weeks more than the Prime Minister does in a year.

John Howell: It was interesting to hear in the opening remarks of the Secretary of State for Innovation, Universities and Skills that he is clearly one of those who believe that the verb "to cut" is one of those irregular verbs in the English language—I make efficiency savings, you cut, and presumably he undermines the whole British economy.
	Over the past month I have held a series of events in my constituency to help local businesses, especially small and medium-sized enterprises, in the recession. The reasons for doing that are pretty obvious. First, the help had been extremely fragmented, so no one had the total picture, and what information there was had been slow in coming forward and was incomplete. To follow on from the comments of my hon. Friend the Member for New Forest, West (Mr. Swayne), none of the Government help has reached any of the businesses that came to those meetings.
	The formula for putting the meetings together was the fairly simple one of getting all the help providers and the companies in the same room for the first time. At the first meeting, we needed more than 20 stands for help providers in order for businesses to get a complete picture. More than 200 people attended and two messages clearly emerged: whatever the Government have promised, none of it is getting through; and, although the Government appear to recognise that there is a problem, there was general mirth about the view that the approach was coherent or co-ordinated.
	The drying up of loan finance is the real problem, exacerbated by the punishing charges that the banks impose and the lack of social responsibility that they have shown. There are several examples of that. An engineering company with a long history of excellent cash and debt management, which had made little if any use of its overdraft, suddenly found the facility withdrawn. An important safety net had been removed, with huge risk to that company's reputation. Another company asked why, if the Government were so keen for the banks to show social responsibility, its overdraft had been renewed with an increase of 1,000 per cent. on the bank charges. Perhaps the ultimate summing up came from a company that said:
	"This does not reflect the urgency and support for SMEs that the Government is encouraging the banks to adopt."
	For many companies, the individual measures for business in the Budget may or may not be fine as far as they go, but as my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) pointed out, they are largely peripheral to the main issue. They show the pretence of action when none is happening. Restoring supervision to the Bank of England is more likely than anything else to change banks' behaviour and inject some social responsibility into them. The companies that attended my events expressed huge doubts about whether they can access any of the money that it is suggested is available, or whether the Government or the banks can disburse it.
	The Government have been quiet about business deregulation. Yet, when times are hard, it is all the more important to get regulation right so that it does not add unnecessary bureaucracy. Business deregulation has been downgraded—perhaps the Financial Secretary will comment on whether he has genuinely downgraded its importance. What happened to regulatory budgets? They appear to have been quietly shelved. Responsibility for the matter seems to have been shuffled off to a new better regulation sub-committee of the National Economic Council. What a humiliation for an important agenda, once chaired by Tony Blair, to be relegated in that way.
	Much has been made of the fact that we are considering a Budget for jobs. The Government may have been thrashing about, trying to predict the rise in unemployment, but it was clear from my visit earlier in the year to the European Commission that it already had projections of unemployment hitting 3 million. I would have more faith in the Government's ability to and sincerity about tackling unemployment if they had not wasted five months before recognising the impact of the stock of long-term unemployed on the recession.
	In October, the Work and Pensions Committee heard evidence from the Social Market Foundation that the stock of long-term unemployed was expected to rise substantially—to three or four times the current number. By December, the Minister for Employment and Welfare Reform told the Committee in reply to question 194 in evidence to the "DWP's Commissioning Strategy and the Flexible New Deal" report that,
	"despite the most virulent horror stories of doom and gloom from some, there are no projections that say that the pool of longer term unemployed is going to grow along the same sort of trend as unemployment is at the moment."
	In February, Ministers serving on the Welfare Reform Public Bill Committee said that they were taking precautionary measures because of a belief that the stock of long-term unemployed could increase three or four times and that they were consequently reviewing the flexible new deal contracts. It is not unreasonable to expect the Government to have anticipated that earlier, but it would, of course, have blown the myth of the end of boom and bust.
	Several hon. Members mentioned the VAT cut, and I want to comment on that expensive and time-consuming measure for business. That error has now been compounded by the timing of the increase at one of the biggest sales periods of the year and the cut generating its own bureaucracy, as we see from the anti-avoidance provisions that will be introduced in the Finance Bill.
	I could not believe that the Government tried to claim that the VAT decrease had worked. Strictly speaking, of course, it will never be possible to say with certainty that it has worked, because a direct comparison with the counter-argument—that is, what would have happened without it—cannot logically be made. We are therefore reliant on proxies, looking for a surprisingly large increase in the sales of items subject to VAT relative to those that are not subject to VAT. Any claim by the Government relying on the fact that non-food sales, which attract more VAT, have done better completely obscures the fact that they are based on volumes rather than values, so the cut is unlikely to account for any deep discounts that we saw over that period. Such data are unclear anyway, with so many factors playing a part, such as postponed purchases finally being made and the effect of interest. Any Government claim that the VAT decrease has done its work is largely no more than wishful thinking and spin.
	The International Monetary Fund identified 64 banking crises around the globe between 1970 and 1999. It showed, as did other studies, a similar pattern in many of the crises. What burst the bubbles was different in each case, but it is right to ask why the Government did not recognise that sequence. One is tempted to answer the question by saying that the Government were so confident that they had ended boom and bust that they did not believe that a crisis would happen in the UK and had actually started to believe the spin of their own fiscal rules. As a result, the appalling economic state of the country has now been found out and we are all paying the price, in this Budget of despair.

Greg Hands: It is a pleasure to make a winding-up speech in today's Budget debate. Remarkably, this Budget has unravelled even more quickly than other Labour Budget disasters of recent years. Friday's gross domestic product figures laid bare the Chancellor's recklessly optimistic growth forecasts, which had been made less than 48 hours earlier. With the economy contracting at its fastest rate in 30 years, forecasters and observers were left with little choice but to agree with the Conservatives' initial reaction to Wednesday's Budget: the Government are betting the shop on there being a trampoline recovery. Given the dire state of the patient, the recovery they are seeking or predicting appears almost bionic in proportion. With growth projections of 3.5 per cent. for the recovery, they are predicting that in 2011 and two years beyond, the economy will be growing as fast as it is currently shrinking. Given the fact that the shrinkage is at its highest rate in 30 years, we all have to question that forward growth assumption. Given that those forward growth forecasts for two years did not even last two days, we must register our severe our doubts.
	Today we heard a few Labour Members setting out to blame Baroness Thatcher for the current recession. We heard reasons such as the big bang, right to buy and encouraging home ownership. We even heard about her abolition of currency controls as being one reason for the current recession.
	One Labour Member did not blame Baroness Thatcher for the recession—the right hon. Member for North Tyneside (Mr. Byers). In a devastating speech, he asked about the 50p tax rate, warning that focus groups may sometimes be wrong. He called the rate "more to do with political positioning" than raising revenue, an extraordinary and significant attack on the Government. He reminded everyone of the breaking of the Labour manifesto pledge. I recall Tony Blair standing at the Dispatch Box and attacking the Liberal Democrats many times for proposing a 50p top tax rate. That will come back to haunt the Government.
	We heard from other Labour Back Benchers. The hon. Member for Barnsley, Central (Mr. Illsley) attacked rises in alcohol duties and the tax on bingo, to which I shall return. On a rare occasion, we heard from the right hon. Member for Banff and Buchan (Mr. Salmond). I thought for a moment that perhaps he was clocking in a few weeks too early and was not up to date with the news that the scheme has been scrapped. In a good speech, he talked about Labour's "reverse stimulus", and predictably he attacked Trident. However, he seemed to be saying that Labour is spending too little, which was interesting.
	The hon. Member for Gloucester (Mr. Dhanda) started off with a number of erroneous claims about my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), although he balanced that with some criticism of the Budget. I share the opinion of many in the House that the Prime Minister was wrong to sack the hon. Gentleman last year. I happen to know quite a bit of the background of the case, because it was over a planning application in my constituency. I think that the hon. Gentleman made the right call on that, and the Prime Minister made the wrong call to sack him.
	My hon. Friend the Member for Mid-Sussex (Mr. Soames) gave a packed but excellent speech, describing an economy in ruins. He offered a comprehensive critique of the past 12 years of Government policy on pensions, borrowing and tax complexity and of failures in manufacturing.
	Although the calls by the hon. Member for Luton, North (Kelvin Hopkins) for national protectionism, exchange controls, even more debt and even more punitive taxation will get marks for bravery, I am not sure that they will find much favour on any Front Bench.
	We had an excellent and passionate speech from my hon. Friend the Member for New Forest, West (Mr. Swayne), who called the Budget post-dated. He described the harsh reality facing small businesses in his constituency, made a plea for savers and called for more scrutiny of quantitative easing.
	The hon. Member for Islington, South and Finsbury (Emily Thornberry) talked about her early career as a barrister, which started in Poplar job centre. I thought that she could be a role model for some in her constituency during this particular downturn, reminding us that miracles do happen.
	My hon. Friend the Member for Lancaster and Wyre (Mr. Wallace) made a detailed speech on the importance of innovation, intellectual property, and science and technology, especially in the aerospace industry. We had another excellent speech from my hon. Friend the Member for Banbury (Tony Baldry), who pointed out that almost no Labour Members were here to talk about the Budget. He concentrated on public finances and reminded us what the IFS had said about the two Parliaments of pain that are expected to come. He gave Labour Members some home truths about their dishonest Budget. My hon. Friend the Member for Beverley and Holderness (Mr. Stuart) also pointed out a number of dishonesties in the Government's Budget, and put this terrible Budget in its proper historical context.
	The hon. Member for Wolverhampton, South-West (Rob Marris) made a thoughtful speech on the size of the state, the importance of wealth creation and whether we are getting value for money from our public services. Conservative Members would certainly welcome that debate.
	My hon. Friend the Member for Poole (Mr. Syms) drew some interesting international parallels with Germany and California. Interestingly, he was the first speaker in today's debate to use the phrase "boom and bust". Not so long ago, "boom and bust" was normally the phrase that started each Budget debate. It was used by the then Chancellor, the current Prime Minister, who claimed that he had effected its abolition.
	My hon. Friend the Member for Henley (John Howell) made an excellent speech mainly about SMEs. He reminded me, and many others, why we campaigned so hard for him to be elected to the House more or less a year ago today. My hon. Friend the Member for North Essex (Mr. Jenkin) analysed the deficit and the debt in some detail and rightly called the Budget "a desperate last throw of the dice". It has been a fascinating debate.
	Very few businesses will have been fooled by the very few goodies that they were offered on Wednesday. Most will have been left reeling at the thought of how much business taxation might have to rise to pay for Labour's profligacy. The Chancellor set great store by some of those measures, but each of them was dwarfed by the appalling borrowing figures. He announced in just 93 words the borrowing of £703 billion, yet it took more than 2,500 words to outline the new sweeteners.
	Some of those measures were long overdue. We heard about the £50 million on forces' homes, the £100 million to local authorities for energy-efficient homes and the £500 million in incentives to the construction industry. That dwelling on the good news and the covering up of the bad news has been a characteristic of new Labour Budgets, but let us dwell for a moment on the relative sizes of the good news and the bad news. For every pound earmarked for the construction industry in the Budget, £1,400 was announced in new borrowing. For every pound on energy-efficient homes, we heard of £7,000 in borrowing. For every pound earmarked for much needed forces' accommodation, £14,000 was announced in new borrowing.
	The main story of this Budget is debt, and it is that which I want to dwell on particularly in my remarks—some of the dangers to which the UK economy is exposed by these massive levels of borrowing. When the Government announced £703 billion of new net debt on Wednesday, with £220 billion to come in gross debt this year, the market more than shuddered. There is an assumption in Government circles that the ability of the market to absorb debt is infinite. I worked for a large part of the '80s and the '90s in the fixed income markets. It is true that Governments are less likely to default on payments in their domestic currency debt than many observers in the press might think, but that does not stop the market from making it extraordinarily expensive to borrow, and at the moment, it is expensive to borrow.
	Although absolute levels for gilt yields are not high by the standards of some previous recessions, the yield curve is incredibly steep. Anyone who has worked in fixed income knows that interest rates are best viewed proportionally, rather than linearly. In other words, a rise from 0.5 per cent. to 1 per cent. can be as significant as a rise from 10 to 20 per cent.
	The current gilt yield curve sees rates rising from 0.5 per cent. to 4.5 per cent., which means that long-term rates are an incredible nine times as high as short-term rates. We know that all world yield curves are currently steep, but none is as steep as the sterling curve. Some implied forward interest rates are truly astronomical, which means that the market is saying that borrowing costs in the future will be very large indeed, especially real borrowing costs—in other words, relative to inflation. Those high borrowing costs will have an impact on taxation and spending in future years.
	Let me give one example from a local authority where the opposite happens, my own council of Hammersmith and Fulham. A large part of the reason that we have been able to reduce council tax is that, by repaying £20 million of long-term debt, we have been able to save around £1.7 million each year in debt interest payments. Therefore, it is not just the ability of the gilt market to absorb all of this paper. We need to ask the question: what will the market charge for the borrowing?
	Let us think for a moment about some of the potential buyers of that £703 billion of new gilt issuance. As the Leader of the Opposition told us on Wednesday, borrowing in the next two years will be more than was borrowed by every previous Government combined. We are dealing with absolutely huge numbers.
	Many have been tempted to assume that foreign investors will take up some of the slack, and on that I wish to turn to the related question of the strength of sterling, which curiously received no attention in the Chancellor's speech—the word "sterling" did not appear at all. Foreign investors may take some of this huge level of new issuance, but it is worth somebody in the Treasury noting that foreign investors have just taken a 20 to 25 per cent. hit on the foreign currency value of their existing gilt holdings just last year—these foreign investors might well be once bitten, twice shy.
	Thanks to Labour's economic policies, sterling is already very weak—UK visitors abroad will feel that this summer. Some of the effect will be camouflaged by the move by favourite continental holiday destinations to the euro, but those who, as I do, remember over many years getting 10 French francs or three deutschmarks to the pound would be amazed to learn that they would now receive 7.35 and 2.24 respectively. There are other reasons to be concerned over the future prospects of sterling. One of the consequences of the otherwise welcome recent reductions in UK interest rates is that it is now very easy to short sterling; sterling is very cheap to borrow in the short term. The famous Yen carry trade—borrowing in a low-yielding currency to invest in a high one—can now be done with sterling. The risk with the Yen carry trade was always that the Yen would appreciate, but it is harder to see that risk occurring with sterling. That is where I see some of the forthcoming risk.
	I just wish to mention two or three other things in the short time available. First, I believe it to have been an anti-London Budget. I can tell the House that when I headed back to my constituency on the tube last Wednesday evening, I saw some long, drawn faces in the carriages; anybody who was talking, had only one topic of conversation: how awful the Budget was—that was even true of the Chelsea fans on their way to the stadium. The  Evening Standard called this
	"a budget on a wing and a prayer"
	and
	"a hugely irresponsible missed opportunity".
	Remarkably, given that that was its initial view, its opinion actually hardened over the following days. On Thursday, its conclusion was that
	"the capital's taxpayers will bear the brunt of paying off the country's massive debts"
	and that
	"this 50 per cent. is a tax on London."
	Respected commentator Tony Travers implored:
	"Don't push London too far or you will kill off your golden goose."
	Perhaps the Government have already written off London politically—today's  Standard reports a 9.5 per cent. swing against Labour since 2005—but they cannot afford to write off the capital economically.
	Changing tack completely, I wish to ask the Financial Secretary to the Treasury about bingo, which was also mentioned by the hon. Member for Barnsley, Central. The Financial Secretary to the Treasury told us on Thursday that
	"the announcements in the Budget on the taxation of bingo are welcome to the industry."—[ Official Report, 23 April 2009; Vol. 491, c. 434.]
	However, Investec, for one, is calling his raising of bingo duty from 14 to 22 per cent. a "Budget hit" on the industry, as the offsetting cut in VAT is on parts of the industry that may not be subject to VAT in any case. I would be grateful for a clarification of those comments.
	To conclude, I wish to take the House back to the start of the current financial crisis in Autumn 2007, when Ministers attacked Northern Rock for having a so-called "flawed business model". We were told that Northern Rock was excessively dependent on the continuation of strong growth in credit, and in the associated strength of the financial and property sectors. It is clear to all of us, 18 months later, that the UK's public finances shared precisely that same weakness. I agree with  The Wall Street Journal, which said the following on the day after the Budget:
	"'Building Britain's future' is the optimistic title of the UK Government's latest budget. 'Burying Britain's future' would have been more accurate."
	This awful Budget can be summarised as follows: we are in the longest recession since world war two; we have the fastest-rising unemployment on record; the economy is shrinking at the fastest rate in 30 years; and we have the worst public finances in the G20. This Government's management of our public finances has been lamentable. They seem to be unwilling or incapable of taking charge, and it is about time that they gave way to others who can and will sort this mess out.

Stephen Timms: We have had a good debate, on the whole. The backdrop, of course, is the worst crisis in the world economy since the 1930s. The world economy is forecast to shrink this year for the first time since the second world war. No one is under any illusion that this will be easy, but the economy is now benefiting from a great deal of support—the lowest interest rates ever, whereby many people are paying less for their mortgages, and additional support from quantitative easing. Indeed, I agreed with some of the points made by the hon. Member for Poole (Mr. Syms) about the extent of support for the economy and the stimulus measures in the pre-Budget report before Christmas, including the cut to VAT, which several hon. Members mentioned.
	I draw the House's attention to a report two weeks ago by Doug McWilliams of the Centre for Business and Economic Research, who used to be described as an adviser to the Conservative party—he may well still be, for all I know—and its headline:
	"Credit where credit's due—the VAT cut is working."
	The report points out that retail sales have been remarkably resilient, unlike in previous recessions. In his lively speech, the right hon. and learned Member for Rushcliffe (Mr. Clarke) reaffirmed his view that if we are to have a fiscal stimulus, a VAT cut is the one to go for. The report says:
	"The figures are clear; the VAT cut is working. There was an immediate boost to the volume of retail sales after the cut was introduced on 1 December."
	It goes into some detail about how it reaches that conclusion and estimates the net cost of the VAT cut to the Exchequer, and the likely boost to retail sales, and concludes that the VAT cut is
	"good value for the taxpayer".
	The VAT cut will continue to work throughout this year. Indeed, as the National Institute for Economic and Social Research has pointed out, the cut's stimulus impact will increase as the date for the return to the original rate approaches at the end of the year.
	Support for the UK economy has been co-ordinated with others. We have learnt the lesson of the 1930s. Co-ordination then was too little and too late, and the result was a catastrophic depression. Through our presidency of the G20, and this month's London summit, we have ensured co-ordination that is substantial and effective. It has delivered the biggest macroeconomic boost that the world has ever seen—across the G20, an additional $5 trillion will be put into the economy by the end of next year, raising output by perhaps 4 per cent. and saving or creating millions of jobs.
	The Budget builds on that support. It will give businesses and households the temporary support that they need in the short term, and it reaffirms the Government's commitment to take action that will support the economy and help it to emerge sooner and stronger from the downturn. The Budget maintains the support that we have already provided, for example, to ease the cash flows of UK businesses, and builds on it in a carefully targeted way.
	The Budget is not just about delivering support through the downturn; it starts to look beyond current problems. The next few months will clearly be very difficult, but in preparing the Budget it was very important to ensure that we are in a position to make the most of new opportunities that will come with the recovery.

Stephen Timms: I am delighted to respond to both the hon. Gentleman's points. First, he is not taking into account the increase in personal allowance for income tax, which has led to a tax cut for basic rate taxpayers of £145 this year. If he compares this year with a couple of years ago, he will see that that more than offsets the increase in national insurance to which he refers. Secondly, as well as the change in bingo duty to which the hon. Gentleman referred, the Budget removes VAT on participation fees. That reduces the overall rate of tax on bingo from 25 to 22 per cent., thus providing support.
	As we heard in the debate, one of the biggest obstacles facing UK businesses is lack of accessible credit. The initiatives we have put in place over the past six months to improve the availability of finance to credit-worthy businesses are delivering, as the right hon. and learned Member for Rushcliffe (Mr. Clarke), the shadow Business Secretary acknowledged—I think his phrase was "beginning to deliver".
	We have introduced a range of measures to support cash flow and capital. The HMRC business payment support service allows businesses to spread tax payments over a period they can afford. Last week, I spoke to the executive chairman of one medium-sized chemicals business; he told me that the service was "brilliant". His worry was that it was about to be withdrawn, but I reassured him that it certainly was not. In fact, we extended it in the Budget so that companies can offset expected future losses against tax bills due now on past profits. In the five months to 19 April, the service had taken 175,000 calls and agreed 112,000 time-to-pay arrangements for the deferral of tax worth almost £2 billion with more than 100,000 businesses collectively employing more than 600,000 people. We are providing the support the economy needs.
	The debate has made clear once again the utter vacuity of the Conservatives' position, which is that it is a bad thing there are problems in the economy—what to do about it, however, not a clue. Last month, we were told that their No. 1 priority—I think it is still their only firm commitment on tax—was to raise the inheritance tax threshold to £1 million, or £2 million for a couple. That would be an average tax cut of £200,000 for just 3,000 of the richest estates, giving no benefit at all to the remaining 96 per cent: a tax cut not just for the few, but for the infinitesimal few. That is the Conservatives' only firm commitment on tax. Beyond that, the public have been told absolutely nothing.
	Where would the £5 billion spending cuts this year fall? There is not a word from the Opposition Benches. Would levels of spending, tax and borrowing under the Conservatives be more or less than those set out in the Red Book? We have no idea at all. Is it that they do not know, or just that they will not say? Whichever it is, the time has now come for them to level with the British people and to recognise that their do-nothing approach to the economic downturn would, if put into effect, have catastrophic consequences, just as it did when they applied it in the '80s and '90s.
	We are certainly in the grip of the worst global economic conditions for decades. Developed economies everywhere are seeing dramatically reduced growth, lower levels of trade and investment, and unemployment on the rise. The Government will not sit back and do nothing. We will take the action that is needed to secure financial stability, to safeguard jobs and to rebuild growth. We are determined to help businesses and households through these difficult times. The Budget provided the right foundation for the future—supporting households and businesses through the recession, putting in place additional targeted help to provide the support businesses need at this particularly difficult time, returning the public finances to balance in the medium term, setting out the measures and the trajectory that will secure that objective, and preparing to make the most of the new opportunities ahead. I commend the Budget to the House.
	 Ordered, That the debate be now adjourned.— ( Ms Diana R. Johnson.)
	 Debate to be resumed tomorrow.

Oliver Letwin: To explain why I sought to secure this debate about the rather recondite subject of the Highways Agency and its costs in relation to pedestrian crossings, it might help if I begin with several tales from my constituency experience of the agency's activities. Before I do even that, however, I should explain, although I am sure that the Minister is already aware of it, that while the agency is mainly preoccupied by running motorways across the length and breadth of our country, it also happens to run the A31/A35, which passes through my constituency. That is not a motorway; indeed, for most of its length in my constituency, it is an ordinary country road with one lane for each direction. It runs through a number of villages in my constituency in which, the Minister will be unsurprised to hear, there are people dwelling. I shall return to that point in a moment because it is one of which the Highways Agency is largely ignorant.
	My first tale comes from some years ago when my constituents wanted to continue to run the Melplash agricultural show. Circumstances necessitated holding the show at a site near the A35. I was preoccupied for some months with trying to persuade the Highways Agency to allow the show to continue. Why did I do so? Because the Highways Agency was extremely concerned about the prospect of its road being used by people to approach the show and then to leave the show at its conclusion. The agency thought it a gross affront to its road that people should use it to go to a local agricultural show.
	My second tale is about the A35 Communities Initiative, which is a group of town and parish councils formed to investigate how we could improve the lives of people living in the various villages and towns affected by the A35. After a lot of shoving and heaving over a couple of years, we managed to persuade the Highways Agency—much against its will, I think—to accede to Hyder Consulting conducting a route investigation. After a great deal of negotiation, we managed to get Hyder Consulting to produce a report acknowledging the existence of people along the A35 in my constituency. The report made many recommendations about how the people affected by the A35 could have their lives ameliorated by various measures, including by putting pedestrian crossings at certain places.
	Before I get on to pedestrian crossings themselves, I should say that while most—not all, it is true—recommendations in the report, and the whole spirit of the report, were accepted by the Highways Agency, the recommendations have never been implemented. I discern no inclination on the part of the agency ever to implement them, which raises the question of why it bothered to delude us by having the report conducted at considerable public expense.
	I turn to the precise question of pedestrian crossings. I became interested in it because in Winterbourne Abbas, a village in my constituency, there is a pedestrian crossing to enable one to cross the road near a school at one end of the village. However, the village is long, and nobody has the funds to build paths all the way along it. In any case, parents emerging from the housing estate where many of the parents and children live would be unable to approach the school on any kind of path that went all the way through the village because of how the road lies, and the way in which it is bisected by other roads.
	There is a long-standing desire to have a pedestrian crossing at the other end of the village, where traffic proceeds rather more quickly, and where parents could cross in safety with their children. I began to agitate for a pedestrian crossing at the other end of the village, as any local MP would do. I have never framed my correspondence, but I shall in due course publish my correspondence on the subject, because it would amuse the nation. It took quite a long time to discover why the Highways Agency was so extremely reluctant to play ball with regard to my eminently consensual suggestion that the parish council, and perhaps the district council and others that I could find, would contribute towards the cost of a pedestrian crossing, if only the Highways Agency would tell me how much it would cost to put in place.
	It was not until the eighth or ninth round of correspondence that the Highways Agency eventually admitted that, based on another pedestrian crossing that it was building in Chideock in another part of my constituency, the likelihood was that the pedestrian crossing would cost rather more than £110,000. When I discovered that pedestrian crossings are put in place by my county council on identical roads for less than half that sum, and when I looked at other pedestrian crossings up and down the country built by local authorities and found no other body that put in place pedestrian crossings for £110,000, I became suspicious of that figure, so I asked for breakdowns. It took a long time, but eventually I got those breakdowns, and I discovered some very interesting facts, among them the fact that the Highways Agency spends a very large amount of money at the design stage of the pedestrian crossing.
	I admit that there are many things in the world that it is complicated to design, but I rather fancy that if the Minister and I sat down together, not long after the end of the debate, we could between us, without huge technical expertise, design a pedestrian crossing. The idea is that there should be a thing crossing a road with some lines on it, and a little post at either side. It is not terribly complicated. At the time, I envisaged—I shall provide evidence that this may not be true—that the Highways Agency had in its possession a personal computer, a modern device that enables one to replicate the design of one pedestrian crossing in another location. A remarkable achievement of the computer is its ability to replicate things quite easily, and not at great expense. I have a strong suspicion that one pedestrian crossing is remarkably similar to another, so I doubt that it really is necessary to spend a lot on design.
	I shall not regale the Minister with large numbers of other examples of the absurdity built into the costing. I reported the matter to the National Audit Office, and held discussions with it. I also reported the matter to the Public Accounts Committee. I believe that the NAO is now conducting another of its many inquiries into the Highways Agency. I rather suspect that the fate that will befall this inquiry is that which befell previous inquiries—namely that the Highways Agency was sublimely uninterested in the fact that the NAO has repeatedly shown that it is grossly financially incompetent and ineffective. That is not a partisan remark; it appears to have been the case for many years.
	I want to return to the subject of human beings. It was not until recently that I really began to understand the Highways Agency in its management of the A35. That comes about as a result of the remarkable example of the waste management site at Gore Cross, proposed by the county council. I do not for a moment expect the Minister to have the slightest idea about Gore Cross, unless someone has briefed him very thoroughly. It is a location at the end of St. Andrew's road in Bridport. The Minister is incredibly well-briefed; he is nodding. He clearly knows about Gore Cross. That is the site proposed by the county council for a waste transfer station much needed in west Dorset. Great expense is being incurred as a result of there not being a waste transfer station in the locality of Bridport.
	This is rather a long-running issue; it has been going on for about 13 or 14 years. Repeatedly, the county council and SITA, the contractor, have attempted to establish a waste transfer site in one place or another that is quite evidently impossible. I was responsible in part for making sure that they did not put it on a place that was, among other things, an area of outstanding natural beauty, very close to a site of special scientific interest, an environmentally sensitive area and, while we are at it, on a world heritage coastline.
	Once the county council and SITA had been persuaded that the location was not ideal, they began to prospect for other locations. There is a universal view, as far as I can make out, among the people—I stress the word again—living in Bridport that it would be nifty if the waste transfer site were not in the midst of the population, but were by the main road. But this is not the proposition. The proposition is that the waste transfer station should be at the end of a road which is highly populated with parents, children and shoppers. The road has a Co-op and is about to get a Lidl shop on it. It has a school close by, and there are many residences.
	Why, one may ask, is the county council attempting to put a waste transfer site in a place to which everyone in the locality objects, when it could quite easily be put at various points along the main road? Answer: the Highways Agency. Why? Because the Highways Agency is unique among public bodies, it seems, in having powers of direction, so that if a planning application is made and the Highways Agency says nay, that's it. No further discussion. It is not like other statutory consultees. It does not take a view; it can direct.
	So the county council lives in mortal terror of the Highways Agency, and instead of investigating where the waste transfer station could be located that would suit the people of Bridport, the county council has investigated the much more salient question, from its point of view, of where the waste transfer site could be located that would suit the Highways Agency. The Highways Agency has a strong principle, which is that it would not have a waste transfer site anywhere on its road because it did not want people using its road. It did not want people going into its road or coming off its road. In fact, its concept is of taking cars from one end of the country to the other and hoping that no people will get on to it and sully the beauty of its road.
	The Highways Agency therefore made it clear to the county council that it would object to, and hence stop, any proposal to have the waste transfer station on its road. I assumed that it must also have done some work, because it is the body that spends thousands of pounds designing pedestrian crossings. One would expect that it had done some studies of the effects of putting the waste transfer site on the road or in the midst of the population. However, it has recently come to light—this I find astonishing—that through the 11, 12 or 13 years of its objections to having the waste transfer site put on or next to its road, the Highways Agency has never conducted a study of the effects of putting it in different places.
	When a study was done, not by the Highways Agency, but by the local residents using Google Earth, another device unknown to the Highways Agency, and a population gravity study, unknown to the Highways Agency, it transpired that in all probability putting the waste transfer site at the end of St. Andrew's road, where people do not want it, will impose more strain on the roundabout which is the single most strained element of the A35 in my constituency, than if it were put on the main road—a fact unknown to the Highways Agency because it had never done the work. It did not feel that it needed to do the work, perhaps partly because of the same cause as the problem with designing pedestrian crossings.
	Perhaps the Highways Agency does not possess a computer. Perhaps it does not know anything about Google Earth. Perhaps it does not have the capacity to do such studies. I do not know. Whether it has the capacity or not, it did not feel the need to think about the subject. Why not? Because it has the power of direction.
	The tale that I am presenting to the Minister through this tiny microcosm of my constituency is this: here is a very large and expensive body that may or may not be very good at running motorways—I do not know; I have nothing to do with motorways—but that is no good whatsoever at running the A35, which is a road that has to do with human beings. The Highways Agency is no good at running the road because it cannot, at reasonable cost, do things that are needed for those human beings, it does not make studies that are necessary in order to determine how to deal with those human beings, it does not recognise the existence of those human beings and is not interested in them, and it does not have the technical competence to do things which it ought to do before it takes views which lead to years and years of public expenditure and public distress.
	Amusing as the tale is, in the end it is disgraceful. That is not how public administration should be in the United Kingdom. I am sure it is not what the Minister wants, and I cannot believe that it is what the Highways Agency itself would like to see. So it seems clear that we need a thorough investigation of why the Highways Agency is so very bad at running such a road, and what is to be done about it.

Paul Clark: I congratulate the right hon. Member for West Dorset (Mr. Letwin) on securing the debate. If the operations of the Highways Agency were as pure, clear and precise as he describes them, I would be the first to agree that the situation is totally unacceptable. I accept, however, that we need to be ever vigilant about how we can improve matters and about efficiency, as hon. and right hon. Members would rightly expect us to be. Indeed, the notes before me about pedestrian crossing installations and Highways Agency costs recognise the great interest that the right hon. Gentleman has taken in that work.
	By way of dealing with a number of points that have been raised about costs, design and the process, I shall gently point out the role of the Highways Agency in covering roads such as the A35. Many strategic roads involve communities that have ended up becoming divided over time, and that is true of some of the communities that the right hon. Gentleman represents. They have been divided by higher volumes of traffic and by heavy goods vehicles, which have developed even more so. The Highways Agency is aware of the severance issues and, by working with local stakeholders, is genuinely seeking solutions to improve the lives and well-being of the inhabitants of those towns and villages.
	I shall come on to the specifics of the undoubted delay to one scheme that the utilisation programme identified. However, since 2005, the agency has installed on average six crossings a year, and it has a programme to deliver a similar number this year. When determining the location of such facilities, the agency must be mindful of many impacts, but of delays and increased congestion on the strategic road network in particular. Any increase in journey times can add significant costs to road users and adversely affect the country's economic competitiveness and growth.
	The need to reduce transport's emissions of carbon dioxide and other greenhouse gases must be considered at the same time. There have been several proposals on the A35 in the right hon. Gentleman's constituency—at Winterbourne Abbas, as he said, and at Chideock. A route management study for the A30 and A35 which the agency produced was undertaken to see the exact problems that pedestrians in those villages and along those routes experience. As I am sure he is aware, the agency has worked closely with local parish councils and other stakeholders to find solutions.
	There have been substantial exchanges of correspondence about Chideock, some of which I have seen. Perhaps I shall publish it, too. As I said at the outset, I accept that work, particularly on the Chideock scheme, has been slower than planned. The agency and the Department for Transport recognise that. However, the agency is seeking to resolve a number of land acquisition issues that are preventing the scheme from progressing, and, additionally, I assure the right hon. Gentleman that an environmental study on the impact of the proposed crossing will be completed by May.
	The agency in the south-west region has confirmed to me—of course, in preparing for this debate I wanted all the facts—that the installation of a crossing at Chideock is included in its delivery programme for 2009-10. I am sure that that will be welcomed by many of the residents whom the right hon. Gentleman represents. However, delivery this year is subject to the resolution of the land issues, which will probably require a compulsory purchase order. I am told that that will definitely be published in June. Should a public inquiry be necessary in response to the compulsory purchase order, that would add further delay, but I sincerely hope that all concerned, including the right hon. Gentleman, will help this process by trying as far as possible to ensure that the compulsory purchase order proceeds—although the order may not have been anticipated at the time of the agency's director writing to the right hon. Gentleman.
	Of the other road crossings that are proposed in the four-year programme, three are to be installed along the A35 within or near the right hon. Gentleman's constituency: Honiton and the villages of Winterbourne Abbas and Morcombelake will also benefit from new pedestrian facilities. The scheme at Honiton is in the 2009-10 programme, with Winterbourne Abbas and Morcombelake planned to follow in 2011-12.
	Let me turn to costs, which are extremely relevant and important to the points that the right hon. Gentleman has raised. In 2008, the National Audit Office carried out a review of the costs of pedestrian crossing facilities installed by the Highways Agency, and the agency provided a full contribution to the report. It is my understanding that the NAO's report has not been published and is not in the public domain. The agency gave details of 23 crossings that have been installed since 2006, of which a small number—I think four—were selected by the NAO for closer scrutiny. The agency fully recognises that the costs of installing pedestrian crossings on the strategic road network will inevitably be more than on local authority roads or less busy roads.